Darden Restaurants Inc (DRI)

The analysis of Darden Restaurants Inc.'s solvency ratios, based on the provided data, indicates a notably conservative capital structure with respect to its long-term debt obligations. The debt-to-assets, debt-to-capital, and debt-to-equity ratios are all reported as zero across the selected dates, specifically May 28, 2023; May 31, 2023; May 26, 2024; May 31, 2024; and May 31, 2025. Such figures suggest that the company currently has no recorded leverage in terms of debt relative to its assets, capital, or equity, highlighting a potentially debt-free or minimal-debt capital structure during this period.

In contrast, the financial leverage ratio presents values considerably above 1, specifically 4.65 at both May 28 and May 31, 2023; increasing to 5.05 on May 26 and 31, 2024; and reaching 5.45 by May 31, 2025. This ratio measures the extent to which the company employs debt and financial leverage to finance its assets relative to its equity base. The rising trend in this ratio over the specified period indicates an increased reliance on debt or other financial obligations, notwithstanding the zero debt ratios. This discrepancy may imply the presence of off-balance sheet liabilities, preferred stock, or other financial instruments that contribute to leverage without appearing in traditional debt ratios.

Overall, the data portray a company with a very low or zero level of reported leverage in terms of traditional debt ratios, paired with a steadily increasing financial leverage ratio, which suggests subtle shifts in the company's capital structure or alternative financing methods. This combination indicates a relatively conservative debt profile, with the company possibly emphasizing equity financing but gradually increasing overall financial leverage or employing other forms of financial obligations.

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Coverage ratios

The interest coverage ratios for Darden Restaurants Inc. across the specified periods indicate significant fluctuations. As of May 28, 2023, the ratio was 23.29, reflecting a robust capacity to meet interest obligations from earnings before interest and taxes (EBIT). This ratio declined to 19.54 by May 31, 2023, which, while still indicative of strong coverage, suggests a slight reduction in earnings relative to interest expenses. For the period ending May 26, 2024, data is unavailable or not reported, denoted by a dash. By May 31, 2024, the ratio decreased further to 9.19, signaling a notable decline in earnings relative to interest expenses but still maintaining a coverage ratio above the commonly accepted threshold of 3, which typically indicates manageable debt servicing ability. The subsequent period, May 31, 2025, again shows an absence of data or reporting, represented by a dash, making it impossible to assess trends or changes for that period. Overall, the observed trend demonstrates a reduction in Darden’s interest coverage ratio over the recent periods, yet as of May 31, 2024, the ratio remains comfortably above critical concern levels, indicating satisfactory capacity to service interest obligations.