Darden Restaurants Inc (DRI)

Darden Restaurants Inc's solvency ratios paint a picture of a company with a strong financial position. The debt-to-assets and debt-to-capital ratios have remained consistently low at 0.00 over the past five years, indicating that the company holds minimal debt relative to its total assets and capital structure. This suggests that Darden Restaurants is effectively managing its debt levels and is less reliant on borrowing to fund its operations and growth.

Similarly, the debt-to-equity ratio has also remained low, hovering around 0.30 over the same period. This indicates that the company primarily relies on equity financing rather than debt to support its operations, which is a positive sign of financial stability and strength.

The financial leverage ratio, which measures the company's ability to meet its financial obligations, has shown a slight increase from 3.79 in 2021 to 5.05 in 2024. While this increase may suggest a higher reliance on debt to finance its operations, the ratio is still within a reasonable range and does not raise significant concerns about the company's solvency.

Overall, based on the solvency ratios provided, Darden Restaurants Inc appears to have a solid financial footing with low debt levels and a healthy balance between debt and equity financing, indicating a strong ability to meet its financial obligations and weather economic uncertainties.

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Coverage ratios

Interest coverage ratio is a financial metric used to assess a company's ability to pay its interest expenses on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.

In the case of Darden Restaurants Inc, the interest coverage ratios over the past five years demonstrate a fluctuating trend. As of May 26, 2024, the interest coverage ratio was not provided in the table. However, in the preceding years, Darden Restaurants Inc showed strong interest coverage ratios, with a peak of 27.69 in May 28, 2023, and 27.69 in May 29, 2022.

These high ratios indicate that Darden Restaurants Inc generated significantly more earnings before interest and taxes than the interest expenses it had to pay during those years, reflecting a robust ability to service its debt obligations comfortably.

However, there was a notable decline in the interest coverage ratio to 13.07 on May 30, 2021, which although still positive, suggests a decrease in the company's ability to cover its interest payments compared to the previous years.

The most concerning observation was the negative interest coverage ratio of -2.33 on May 31, 2020. This indicates that Darden Restaurants Inc did not generate sufficient earnings before interest and taxes to cover its interest expenses during that period, posing a risk in terms of its debt servicing capabilities.

Overall, while most of the historical data reflects a healthy interest coverage position for Darden Restaurants Inc, the negative ratio in 2020 and the declining trend raise some concerns about the company's ability to consistently meet its interest obligations in the long term. Investors and creditors should monitor these ratios closely to assess the company's financial health and debt management strategies.