Darden Restaurants Inc (DRI)

Short-term

Turnover ratios

The activity ratios for Darden Restaurants Inc. over the specified periods reveal insights into the company's operational efficiency and management of assets and liabilities.

Inventory Turnover:
The inventory turnover ratio has shown a general upward trend over the analyzed periods. Starting from approximately 21.58 times in August 2022, the ratio has fluctuated but exhibited resilience, reaching a peak of around 26.67 times in August 2024 before declining slightly to 20.57 times by May 2025. This upward trajectory suggests that Darden has been improving its inventory management, efficiently converting inventory into sales. The increase indicates better turnover days, reducing holding periods and potentially minimizing carrying costs. The recent rise up to late 2024 indicates enhanced inventory circulation efficiency, though the subsequent decline may warrant attention to inventory levels and sales dynamics.

Receivables Turnover:
The receivables turnover ratios demonstrate variability but generally remain high, indicative of a disciplined credit and collections process. Initially, the ratio fluctuated around 198 times in late 2022 but dipped to approximately 139.54 times in November 2022, before rebounding to above 180 times in mid-2023. The ratios peaked at roughly 186.15 times in August 2023 and remained elevated through late 2023, although declines are visible in early 2024, reaching around 128.75 in May 2025. This pattern suggests periods of efficient receivables collection, with some variability possibly attributable to changes in credit policies or customer payment behavior. While still indicative of rapid collection relative to sales, the recent decline may imply a loosening of credit terms or increased customer credit periods.

Payables Turnover:
Payables turnover ratios have trended upward over the period, starting around 14.49 times in August 2022 and rising to approximately 19.80 times in August 2024 before decreasing again to 14.58 times in May 2025. This increase indicates a trend of paying suppliers more quickly, possibly reflecting better liquidity, stronger supplier relationships, or a strategic shift toward shorter payment cycles. The subsequent decline in early 2025 could suggest a return to more extended payment terms or cash flow considerations.

Working Capital Turnover:
Data for working capital turnover was not available for the respective periods, limiting analysis of how effectively Darden utilizes its working capital over time. The absence of these figures suggests either data unavailability or a focus on other efficiency ratios within the provided dataset.

Overall Assessment:
The activity ratios collectively depict a company that has been progressively enhancing its operational efficiency, particularly in inventory management and receivables collection, while also adjusting its payment practices with suppliers. The improvements in inventory turnover and payables ratios may reflect strategic initiatives to optimize working capital or respond to market changes. Fluctuations in receivables turnover imply variability in customer payment behaviors or credit policies. Overall, these ratios highlight a company attentive to operational efficiency, with recent trends underscoring ongoing adjustments that could impact liquidity and cash flow management.

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Average number of days

The activity ratios for Darden Restaurants Inc., focusing on days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, exhibit noteworthy trends and stability over the periods analyzed.

Inventory Turnover (DOH):
The average days of inventory on hand fluctuated within a narrow range, generally oscillating between approximately 16.17 days and 18.39 days. The recent data show a decreasing trend in inventory days, with the latest period recording approximately 15.54 days, down from around 16.25 days in late August 2023 and significantly lower than the peak of 18.09 days observed in late November 2022. This decline may imply improved inventory management and increased efficiency in turnover or procurement practices.

Receivables Collection (DSO):
Darden’s days of sales outstanding have remained consistently low across all periods, primarily under 3 days. The data range from approximately 1.84 days to 2.83 days, indicating a rapid collection cycle and efficient receivables management. The slightly upward shift to around 2.83 days in the latest period suggests minimal variation, but overall, the company maintains a quick receivables turnover.

Payables (Number of days of payables):
The payment period to suppliers has displayed some variability but remained within a range of roughly 18.44 days to 26.59 days. Notably, the most recent period shows a decline to about 19.71 days, aligning with earlier levels observed in early 2024. Historically, the company appears to optimize its payables, balancing timely payments and leveraging credit terms. The recent shortening of the payable days suggests a potential tightening in payment practices or operational adjustments.

Overall Interpretation:
The company demonstrates efficient inventory management, as evidenced by decreasing inventory days. Additionally, a very short collection cycle indicates prompt receivables handling. The fluctuation and overall moderate levels of days payable suggest a disciplined approach to managing supplier obligations, balancing liquidity preservation with supplier relationships. These activity ratios collectively reflect operational efficiency and effective working capital management, with recent trends indicating incremental improvements in inventory turnover and manageable payment terms.

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Long-term

The analysis of Darden Restaurants Inc.'s long-term activity ratios, based on the provided data, reveals insights into the company's utilization efficiency of its fixed assets and total assets over the specified periods.

Fixed Asset Turnover Ratio:
This ratio measures how effectively the company employs its fixed assets to generate sales revenue. The data indicates considerable fluctuation during the observed period. Historically, the fixed asset turnover ratio was relatively high, with peaks around 3.89 (August 28, 2022) and 3.76 (February 26, 2023). However, it experienced notable declines, reaching as low as 1.41 (November 30, 2022 and August 31, 2023). These declines suggest periods where the fixed assets were less productive in generating sales, potentially attributable to strategic adjustments, capital investments, or operational disruptions. Recent data points show ratios around 3.66–3.69, indicating a recovery to higher efficiency levels comparable to earlier periods, although some data points are unavailable beyond 2024.

Total Asset Turnover Ratio:
This ratio evaluates overall asset efficiency in generating sales revenue. The company's total asset turnover remained relatively stable around 1.00 in the initial periods, with minor fluctuations. It experienced a slight downward trend post-Autum 2022, dipping to approximately 0.92 by November 30, 2024. However, the ratio recovered somewhat, reaching around 0.94–1.00 in early 2024. These variations suggest that the company’s overall asset utilization has been relatively consistent but may have faced slight efficiency declines during certain periods. The small upward movements in recent periods imply some operational improvement or asset utilization optimization.

Overall Interpretation:
The long-term activity ratios reflect a pattern of operational adjustments and varying asset productivity. The fixed asset turnover particularly exhibits volatility, which could be linked to strategic investments, remodeling, or shifts in sales volume relative to fixed assets. The steadiness in total asset turnover points toward a relatively consistent efficiency in utilizing the total asset base, despite minor fluctuations. The recent data suggests a period of stabilization or partial recovery in asset utilization efficiency after some variability in previous periods.