Darden Restaurants Inc (DRI)

Financial leverage ratio

		May 31, 2025	May 31, 2024	May 26, 2024	May 31, 2023	May 28, 2023
Total assets	US$ in thousands	12,587,000	11,323,000	11,323,000	10,241,500	10,241,500
Total stockholders’ equity	US$ in thousands	2,311,300	2,242,500	2,242,500	2,201,500	2,201,500
Financial leverage ratio		5.45	5.05	5.05	4.65	4.65

May 31, 2025 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $12,587,000K ÷ $2,311,300K
= 5.45

The financial leverage ratio of Darden Restaurants Inc indicates the extent to which the company utilizes debt to finance its assets. As of May 28, 2023, and May 31, 2023, the ratio stood at 4.65, suggesting that for every dollar of equity, the company had approximately 4.65 dollars in total assets financed through debt. This ratio remained steady through the same period, reflecting no immediate change in leverage.

Moving forward, by May 26, 2024, the financial leverage ratio increased to 5.05, representing a rise of approximately 0.40 points from the previous year. This increase indicates that the company's reliance on debt relative to equity has grown, suggesting an augmentation in financial risk but potentially also indicating a strategy aimed at leveraging debt to facilitate growth or other operational needs.

Looking further ahead, the ratio as of May 31, 2025, is projected to be 5.45. This continued upward trend depicts a further increase in leverage, implying that the company's debt proportion relative to its equity is likely to escalate over this period. Such a trajectory suggests an ongoing or planned escalation in the use of debt financing.

Overall, the progressive increase in the financial leverage ratio from 4.65 to 5.45 over the two-year horizon reflects a deliberate or ongoing shift toward higher leverage. This could enhance returns on equity during periods of favorable economic conditions but also elevates the company's financial risk profile due to the increased obligation to meet debt-related payments.