Darden Restaurants Inc (DRI)

Cash conversion cycle

		May 26, 2024	Feb 25, 2024	Nov 26, 2023	Aug 27, 2023	May 28, 2023	Feb 26, 2023	Nov 27, 2022	Aug 28, 2022	May 29, 2022	Feb 27, 2022	Nov 28, 2021	Aug 29, 2021	May 30, 2021	Feb 28, 2021	Nov 29, 2020	Aug 30, 2020	May 31, 2020	Feb 23, 2020	Nov 24, 2019	Aug 25, 2019
Days of inventory on hand (DOH)	days	24.71	25.80	27.30	25.87	26.98	29.20	29.04	27.31	27.36	25.62	26.09	25.60	24.53	28.65	27.76	24.10	24.79	23.54	22.07	20.91
Days of sales outstanding (DSO)	days	2.53	2.36	2.67	2.01	2.80	2.04	2.63	1.90	2.74	2.07	2.95	3.10	3.47	2.58	2.47	2.39	2.33	2.13	2.39	2.17
Number of days of payables	days	33.98	35.13	37.26	37.82	39.95	40.46	42.69	40.69	37.10	36.80	40.28	39.46	39.14	36.36	32.22	31.55	29.88	36.91	35.38	36.11
Cash conversion cycle	days	-6.74	-6.97	-7.29	-9.94	-10.16	-9.21	-11.03	-11.48	-7.00	-9.10	-11.24	-10.75	-11.15	-5.12	-1.98	-5.05	-2.76	-11.24	-10.92	-13.03

May 26, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.71 + 2.53 – 33.98
= -6.74

The cash conversion cycle of Darden Restaurants Inc has ranged from -13.03 days to -1.98 days over the past several quarters. A negative cash conversion cycle indicates that the company is able to collect cash from customers before paying its suppliers and creditors, which is generally favorable as it signifies efficient management of working capital.

The trend of the cash conversion cycle shows fluctuation but with an overall negative trend, indicating that the company has been efficient in managing its cash flows. The company has been able to convert its investments in inventory and accounts receivable into cash quickly, leading to a shorter operating cycle. This can help in improving liquidity and profitability as it reduces the need for external financing and minimizes the risk of cash flow issues.

It is important for Darden Restaurants Inc to continue monitoring and managing its cash conversion cycle effectively to ensure optimal working capital management and sustainable growth. Efficient management of the cash conversion cycle can contribute to improved financial performance and competitiveness in the industry.