Darden Restaurants Inc (DRI)

Short-term

Turnover ratios

The activity ratios for Darden Restaurants Inc., as of the data provided, indicate various trends over the periods ending in May 2023, 2024, and 2025.

Inventory Turnover:
The inventory turnover ratio reflects how effectively the company manages its inventory levels. It increased from 13.53 (May 28, 2023) to 29.19 (May 31, 2023), approximately doubling within that period, signaling a significant improvement in inventory management or sales efficiency. In the following year, it marked a decrease to 14.77 (May 26, 2024) and then surged again to 30.91 (May 31, 2024). By May 2025, the ratio declined to 11.74, indicating a reduction in inventory turnover efficiency. Overall, the data demonstrates considerable fluctuations, suggesting periods of both high inventory efficiency and potential oversupply or slowing sales in later periods.

Receivables Turnover:
The receivables turnover ratio remained relatively high across all periods, with slight fluctuations. It was 130.44 on May 28, 2023, and very similar at 130.77 by May 31, 2023. In 2024, it increased slightly to 144.01 (May 26) and held steady at 143.99 (May 31). By May 2025, the ratio decreased marginally to 128.75. This pattern indicates that Darden maintains a generally efficient collection process, with high receivables turnover ratios suggesting prompt receivables collection. The slight decline in the latest period may warrant monitoring, but overall, receivables management appears consistent.

Payables Turnover:
The payables turnover ratios exhibit notable variability. It was 9.14 on May 28, 2023, increasing sharply to 19.72 by May 31, 2023, reflecting a shorter period for settling payables, possibly indicating a change in credit terms or supplier relations. In the subsequent year, the ratio increased further to 10.74 (May 26, 2024) but then rose significantly to 22.48 (May 31, 2024). In the latest period, the ratio decreased to 8.32. These fluctuations suggest shifts in the company's payment practices or supplier credit policies, with periods of faster and slower payment cycles.

Working Capital Turnover:
Data for working capital turnover is unavailable for the periods in question, precluding analysis in this category.

Summary:
The activity ratios for Darden Restaurants display considerable dynamism. The inventory turnover has shown high variability, with periods of rapid turnover interspersed with declines, potentially reflecting changes in inventory management or sales performance. Receivables turnover ratios suggest sustained efficiency in receivables collection, with minimal variation. Payables turnover ratios fluctuate markedly, indicating possible adjustments in payment policies or negotiating terms with suppliers. The absence of working capital turnover data limits a comprehensive assessment of operational efficiency in managing current assets and liabilities.

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Average number of days

The activity ratios provided for Darden Restaurants Inc. reveal insights into the company's operational efficiency and working capital management over recent periods.

Starting with inventory management, the Days of Inventory on Hand (DOH) fluctuated notably across the analyzed dates. As of May 28, 2023, the DOH was approximately 27 days, increasing to roughly 25 days by May 26, 2024, before rising again to about 31 days by May 31, 2025. These variations suggest periods where inventory turnover slowed, which could indicate increased inventory holdings or decreased sales velocity during certain periods, potentially impacting liquidity and storage costs.

In terms of receivables management, the Days of Sales Outstanding (DSO) remained consistently low, oscillating narrowly between approximately 2.5 and 3 days across all sampled periods. This indicates that Darden Restaurants typically collects receivables very quickly, reflecting efficient credit and collection policies and minimal exposure to credit risk associated with customer receivables.

The analysis of accounts payable periods shows more pronounced fluctuation. On May 28, 2023, payables were settled after around 40 days, which decreased significantly to about 19 days by May 31, 2023. However, this period lengthened again, reaching nearly 44 days by May 31, 2025. The variability suggests fluctuating negotiating strategies with suppliers or changes in payment practices. A longer Accounts Payable period can enhance short-term liquidity but may also potentially strain supplier relationships if extended excessively.

Overall, the activity ratios depict a company maintaining a rapid collection cycle with consistently low DSO, while inventory turnover exhibits periods of slowdown. The significant fluctuations in payables days indicate dynamic management of payment terms, likely aimed at optimizing working capital. These trends collectively provide a nuanced view of Darden Restaurants' operational efficiency and liquidity management over the analyzed timeframe.

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Long-term

The analysis of Darden Restaurants Inc.'s long-term activity ratios reveals insights into the company's efficiency in utilizing its fixed assets and total assets over the specified periods.

The Fixed Asset Turnover ratio, which measures how effectively the company is generating sales from its fixed assets, exhibits some fluctuations. It increased from 1.48 on May 31, 2023, to 1.72 on May 28, 2023, indicating an improvement in the utilization efficiency of fixed assets during this period. However, this ratio declined slightly to 1.70 by May 26, 2024, suggesting a marginal decrease in efficiency, though it remains relatively stable and close to the earlier peak. The absence of data beyond May 31, 2024, limits further trend analysis.

The Total Asset Turnover ratio, reflective of overall asset utilization efficiency, remained stable at 1.02 on both May 28 and May 31, 2023. By May 26, 2024, it experienced a slight decline to 1.01, maintaining a relatively consistent level but indicating a minor reduction in the company's overall efficiency in using its total assets to generate sales. The ratio further decreased to 0.96 by May 31, 2025, pointing to a modest reduction in asset utilization efficiency over that longer-term period.

Overall, the ratios point toward a relatively stable asset utilization trend with minor fluctuations. The slight decline in total asset turnover toward the end of the observed period suggests some potential challenges in maintaining previous asset efficiency levels, whereas the fixed asset turnover remained relatively high with only slight variability. This stability indicates consistent operational utilization of assets, though ongoing monitoring is warranted to confirm if these trends persist or if strategic adjustments are needed to enhance efficiency.