Darden Restaurants Inc (DRI)

Short-term

Turnover ratios

Darden Restaurants Inc's inventory turnover has shown a consistent trend of decreasing over the past five years, indicating that the company is holding inventory for a shorter period before selling it. This could imply efficient inventory management strategies.

The receivables turnover ratio has also been relatively high and has increased over the years, suggesting that Darden is collecting its accounts receivable more quickly. This indicates effective credit and collection policies in place.

The payables turnover ratio has fluctuated slightly but remains at a moderate level, indicating that Darden is managing its accounts payable effectively. A higher payables turnover ratio suggests that the company is paying its suppliers more frequently.

The working capital turnover ratio was not provided for the recent years, but in 2021, it was exceptionally high at 314.96. This suggests that Darden was generating a significant amount of revenue relative to its working capital, implying efficient utilization of resources.

Overall, Darden Restaurants Inc's activity ratios reflect efficient management of inventory, receivables, payables, and working capital turnover, demonstrating effective operational performance and financial management.

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Average number of days

Days of Inventory on Hand (DOH) is a measure of how quickly a company sells through its inventory. Over the past five years, Darden Restaurants Inc has shown fluctuations in its DOH, ranging from 22.45 days in 2020 to 27.35 days in 2022. The decrease in DOH from 2022 to 2023 indicates that Darden became more efficient in managing its inventory. However, the increase in DOH from 2023 to 2024 may suggest potential issues in inventory management.

Days of Sales Outstanding (DSO) represents the average number of days it takes for a company to collect its accounts receivable. Darden's DSO has been relatively stable, with a slight increase from 2.35 days in 2020 to 2.80 days in 2023 before decreasing to 2.53 days in 2024. This indicates that Darden has been effective in collecting its receivables promptly, which is a positive sign for the company's cash flow.

Number of Days of Payables reflects how long a company takes to pay its suppliers. Darden's days of payables have shown variability over the five-year period, peaking at 39.95 days in 2023 and decreasing to 33.98 days in 2024. The decrease in days of payables from 2023 to 2024 suggests that Darden has been paying its suppliers more promptly. However, it is essential to monitor this ratio to ensure that Darden maintains healthy relationships with its suppliers while managing its cash flow effectively.

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Long-term

Darden Restaurants Inc's long-term activity ratios provide insight into how efficiently the company is utilizing its fixed and total assets to generate revenue.

The fixed asset turnover ratio has been relatively stable over the past five years, hovering around 1.70 to 1.72. This indicates that Darden is generating approximately $1.70 to $1.72 in revenue for every dollar invested in fixed assets. A consistent fixed asset turnover ratio suggests that the company is effectively utilizing its long-term assets to drive sales.

On the other hand, the total asset turnover ratio has shown some fluctuation over the same period. While the ratio was at its highest in 2020 at 0.95, it has generally remained below 1. This suggests that Darden is generating less revenue for every dollar of total assets compared to its fixed assets. A total asset turnover ratio below 1 could indicate that Darden has excess assets that are not being efficiently utilized to generate sales.

Overall, Darden Restaurants Inc's long-term activity ratios show a mixed picture of asset utilization. While the company appears to be effectively utilizing its fixed assets, there may be room for improvement in maximizing the efficiency of its total assets to drive revenue growth.