Darden Restaurant Financial Statements and Financial Ratios Analyzed from 2015 to 2019

 “Darden Restaurant Inc. 2019 Company Analysis… For Beginners: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this book, the author selected Darden's 2019 10k, 2017 10k annual report, 2016 10k annual report, Darden's 2015 10k annual report, and Darden's 2014 10k annual report as the basis for information gathering.  Once all Darden's 10k annual statements were collected, the author then inserted Darden's s income statement information and Darden's balance sheet information into a customized financial template. 

In this template, various graphs and charts were generated showing changes to Darden's revenues, profits, and other financial statement changes.  With this complete, a brief analysis was done for each of Darden's important financial statement line items.  Further, in the book, we also supply financial ratios for Darden for the last five years.  Each financial ratio has a formula supplied.  This allows you to better understand how the calculations were performed.  On a final note, for each financial statement line item and financial ratio, we offer a brief analysis of the company’s trends and what the changes mean in relations to the financial statements and financial ratios.

Darden Restaurant: Brief Summary

Darden Restaurant’s headquarters in located at 1000 Darden Center Drive in Orlando, FL.  The company competes in the restaurant industry.  Currently, the firm employs over 180,000 individuals.  Popular brands Olive Garden, Longhorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, and Bahama Breeze.

Darden currently has a market capitalization of approximately 14.07 billion.  The firm’s beta is .76.  This indicates that the company is less risky as compared to the overall market.  Their profit margin is slightly over 8%.  This is well above industry average.  Mena holders of the company’s stock include institutions, 93% and company employees, .19%.

Darden Restaurant Leadership

The current executive team and compensation are as follows. As for their executive team, their CEO is Eugene Lee. Senior vice president and chief finance officer is Ricardo Cardenas.  Finally, Matthew Broad is their General Counsel.

Executive Team
Executives Title Pay Amount
Eugene Lee CEO 4.84 Million
Ricardo Cardenas CFO 1.9 Million
David George COO 2.23 Million
Todd Burrowes Pres 1.63 Million
Daniel Kieman Pres 1.46 Million

 

Darden Restaurant’s Income Statement – Summary Analysis

In reviewing Darden Restaurant’s last five years’ income statement, specific findings were identified.

Revenue Growth:  Darden’s growth rate for 2017 and 2016 was 3.4% and 2.5% prospectively.  In 2018, the growth rate jumped up to 12.7%.  Finally, in 2019, the growth rate moderated at 5.3%.  If the company can maintain a 6% growth rate, which is the last five years average, then this will indicate that the firm is exceeding industry averages for revenue growth.

COGS:  The organization’s cost of goods sold has averaged an annual growth rate of approximately 3.8%.  This is well below the company’s revenue growth rate.  This shows that the firm is not only doing an excellent job with negotiating prices for raw materials.  But, if price increases are warranted from raw material cost, then the organization has little issue with passing on the price increase to their customers.

Darden Restaurants Income Statement 2019

Column1 2019 2018 2017 2016 2015
Revenues                      8,510                8,080                7,170                6,933                 6,764
COGS                      2,412                2,303                2,070                2,039                 2,085
Gross Profit                      6,098                5,777                5,100                4,894                 4,679
SG&A                         405                  409                  387                  384                   430
Depreciation                         336                  313                  272                  290                   319
R & D                            -                    -                    -                    -                     -
Other                            -                    -                    -                    -                     -
Operating Expenses                      7,677                7,313                6,492                6,311                 6,396
EBIT                         832                  766                  677                  622                   175
Other Income                            -
Interest Expense                           50                  161                    40                  172                   192
EBT                         782                  605                  637                  450                   175
Taxes                           64                      2                  154                    90                   (21)
Net Income                        713                 596                 479                 375                  709
Tax Rate 8.1% 0.3% 24.2% 20.0% -12.0%

Darden Restaurants Income Statement 2018

Column1 2018 2017 2016 2015 2014
Revenues                 8,080                 7,170                 6,933            6,764            6,285
COGS                 2,303                 2,070                 2,039            2,085            1,892
Gross Profit                 5,777                 5,100                 4,894            4,679            4,393
SG&A                   409                   387                   384               430               413
Depreciation                   313                   272                   290               319               304
R & D                     -                     -                     -                 -                 -
Other                     -                     -                     -                 -
Operating Expenses                 7,313                 6,492                 6,311            6,396            5,976
EBIT                   766                   677                   622               175               174
Other Income
Interest Expense                   161                     40                   172               192               134
EBT                   605                   637                   450               175               174
Taxes                       2                   154                     90               (21)                 (9)
Net Income                   596                   479                   375              709              286

Section 2: Darden Inc. Balance Sheet Analyzed from 2014 to 2019

Cash:  Darden’s cash position has ranged from $535 million to $146 million in the last five years.  In 2019, their cash position was 457 million.  This shows that the firm is maintaining a cash balance closer to their high end as compared to low.

 Accounts Receivable:  In the last four years, Darden has continually increased its Accounts Receivables.  In 2016, the organization ended its Accounts Receivable at $64 million.  This figure had grown moderately to $88 million in 2019.  The growth of their Accounts Receivable may be due to the organization offering some of their proprietary products for retail store sales at grocery stores.  As this trend continues, investors should expect a moderate increase in this line item for the foreseeable future.

Darden Restaurants Summary Balance Sheet 2019

Column1 2019 2018 2017 2016 2015
Cash                           457                146                233                274                535
Short Term Investment                              -                  -                  -                  -                  -
Account Receivable                             88                  83                  75                  64                  78
Inventory                           207                205                178                175                163
Other                              -                  -                  -                  -                  -
Current Assets                          893               553               587               820            1,056
Net PPE                        2,553              2,429              2,272              2,041              3,215
Goodwill                        1,184              1,183              1,201                872                872
Other                              -                  -                  -                  -                  -
Total Assets                       5,893            5,469            5,292            4,583            5,995
Accounts Payable                           333                277                249                242                199
Accrued Expense                           175                177                149                135                141
Accrued Taxes                             12                  -                    2                  -                  13
Notes Payable                              -                  -                  -                  -                  -
LT Debt - Current                              -                  -                  -                  -                  15
Other                              -                  -                  -                  -                  -
Total Current Liabilities                        1,474              1,384              1,289              1,187              1,197
LT Debt                           928                926                936                440              1,452
Other                              -                  -                  -                  -                  -
Total Liabilities                       3,500            3,274            3,190            2,630            3,661
Common Stock                        1,685              1,631              1,614              1,502              1,405
Treasury                              -                  (8)                  (8)                  (8)                  (8)
Retained Earnings                           807                658                560                548              1,026
Other                              -                  -                  -                  -                  -
Total Equity                       2,393            2,195            2,102            1,952            2,334
Total Equity & Liability                       5,893            5,470            5,292            4,583            5,995

 

Darden Restaurants Balance Sheet 2018 - 2014

Column1 2018 2017 2016 2015 2014
Cash                   146                233                274                535                  98
Short Term Investment                     -                  -                  -                  -                  -
Account Receivable                     83                  75                  64                  78                  84
Inventory                   205                178                175                163                197
Other                     -                  -                  -                  -                  -
Current Assets                   553               587               820            1,056            1,976
Net PPE                 2,429              2,272              2,041              3,215              3,381
Goodwill                 1,183              1,201                872                872                873
Other                     -                  -                  -                  -                  -
Total Assets                5,469            5,292            4,583            5,995            7,101
Accounts Payable                   277                249                242                199                233
Accrued Expense                   177                149                135                141                126
Accrued Taxes                     -                    2                  -                  13                  -
Notes Payable                     -                  -                  -                  -                208
LT Debt - Current                     -                  -                  -                  15                  15
Other                     -                  -                  -                  -                  -
Total Current Liabilities                 1,384              1,289              1,187              1,197              1,619
LT Debt                   926                936                440              1,452              2,481
Other                     -                  -                  -                  -                  -
Total Liabilities                3,274            3,190            2,630            3,661            4,944
Common Stock                 1,631              1,614              1,502              1,405              1,302
Treasury                     (8)                  (8)                  (8)                  (8)                  (8)
Retained Earnings                   658                560                548              1,026                996
Other                     -                  -                  -                  -                  -
Total Equity                2,195            2,102            1,952            2,334            2,157
Total Equity & Liability                5,470            5,292            4,583            5,995            7,101

Section 3: Darden Inc. Financial Ratios Analyzed from 2014 to 2019

For this section, I have chosen about 16 different financial ratios to review for Darden Restaurant Inc from 2014 to 2018.  In reviewing each of Darden's financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Darden's Financial ratio.  Ratios calculated and analyzed for the last five years include:

  • Darden Restaurant's current ratio for 2014 to 2018
  • Darden Restaurant's quick ratio for 2014 to 2018
  • Darden Restaurant's cash ratio for 2014 to 2018
  • Darden Restaurant's total asset turnover for 2014 to 2018
  • Darden Restaurant's fixed asset turnover for 2014 to 2018
  • Darden Restaurant's Days Sales Outstanding for 2014 to 2018
  • Darden Restaurant's Inventory Turnover for 2014 to 2018
  • Darden Restaurant'sAccounts Receivable Turnover for 2014 to 2018
  • Darden Restaurant's accounts payable turnover for 2014 to 2018
  • Darden Restaurant's return on assets (ROA) for 2014 to 2018
  • Darden Restaurant's return on equity (ROE) for 2014 to 2018
  • Darden Restaurant's profit margin for 2014 to 2018
  • Darden Restaurant's gross profit margin for 2014 to 2018
  • Darden Restaurant's operating profit margin for 2014 to 2018
  • Darden Restaurant's long-term debt ratio for 2014 to 2018
  • Darden Restaurant's debt to equity ratio for 2014 to 2018
  • Darden Restaurant's times interest earned for 2014 to 2018

Current Ratio:  Darden’s current ratio has ranged between .4 and .88.  In 2019, their current ratio was .61.  For most industries, the optimal current ratio would be 1.0 or higher.  However, in industries with high cash flows such as restaurants and retail stores, lower current ratios have become a trend.  From this, the organization seems to have adequate short-term funding to cover its short-term liabilities.

Total Asset Turnover:  Darden’s total asset turnover ended in 2015 at 1.13.  Over the next five years, the company improved upon its total asset turnover ratio.  This resulted in a 1.44 total asset turnover in 2019.  To continue this trend, the organization must continue to optimize the usage of all assets, which includes short-term as well as fixed.

Return on Assets:  Darden’s return on assets has steadily increased over the last four years.  This means that the company is making more money on fewer assets.  In 2016, their return on assets was 8.18%.  2019 ended with the company at 12.1%.  To ensure that this trend continues, the company may increase its tables available at restaurants or design business strategies to increase its per table turnover.

Debt Ratio:  Darden has systematically been reducing its long-term debt.  In 2015, the organization had approximately $1.4 billion in long-term debt.  As of 2019, their deposition fell to $928 million.  Also, their debt ratio within the same timeframe had fallen from 24% to 15%.  Typically, restaurants often carry a debt load of approximately 50%.  This means that the firm could possibly increase its debt position.  By doing this, not only will this improve the company’s return on equity but they will also be gaining tax benefits from the increased interest expense write-offs.

Darden Restaurants 2019 Liquidity Ratios

Ratios 2019 2018 2017 2016 2015
Current Ratio                           0.61                    0.40
Cash Ratio                           0.31                    0.11
Quick Ratio                           0.47                    0.25
Net Working Capital                            232                     (20)

Darden Restaurants 2019 Asset Utilization

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           1.44                    1.48
Fixed Asset Turnover                           3.33                    3.33
Days Sales Outstanding                           3.77                    3.75
Inventory Turnover                         41.11                  39.42
Accounts Receivable Turnover                         96.70                  97.35
Working Capital Turnover                         36.68              (404.01)
AP Turnover                         25.56                  29.17
Average Days Inventory                           0.11                    0.11
Average Days Payable                           0.07                    0.08

Darden Restaurants 2019 Profitability Ratios

Ratios 2019 2018 2017 2016 2015
Return on Assets 12.10% 10.90%
Return on Equity 29.80% 27.16%
Net Profit Margin 8.38% 7.38%
Gross Profit Margin 71.66% 71.50%
Operating Profit Margin 9.78% 9.48%
Basic Earning Power 14.12% 14.01%
ROCE 18.83% 18.75%
Capital Employed                         4,419                  4,085
ROIC 27.44% 31.70%
Market Measures
Price/Earning Ratio #DIV/0!
Earnings per common Share                              -                        -                        -                        -                        -
Dividend Payout
MVA
EVA

Darden Restaurants 2019 Long-term Debt

Ratios 2019 2018 2017 2016 2015
Debt Ratio 15.75% 16.93%
Debt/Equity 38.78% 42.19%
Times Interest Earned                         16.64                    4.76
2019 2018 2017 2016 2015
FCF                            510                     880
NOPAT                            764                     764
Operating Capital                         2,785                  2,409

2018 Darden Liquidity Ratios

Ratios 2018 2017 2016 2015 2014
Current Ratio                   0.40              0.46
Cash Ratio                   0.11              0.18
Quick Ratio                   0.25              0.32
Net Working Capital                    (20)                 86

2018 Darden Asset Utilization

Ratios 2018 2017 2016 2015 2014
Total Asset Turnover                   1.48              1.35
Fixed Asset Turnover                   3.33              3.16
Days Sales Outstanding                   3.75              3.82
Inventory Turnover                 39.42            40.28
Accounts Receivable Turnover                 97.35            95.60
Working Capital Turnover              (404.01)            83.28
AP Turnover                 29.17            28.80
Average Days Inventory                   0.11              0.11
Average Days Payable                   0.08              0.08

Darden 2018 - Profitablility Ratios

Ratios 2018 2017 2016 2015 2014
Return on Assets 10.90% 9.05%
Return on Equity 27.16% 22.79%
Net Profit Margin 7.38% 6.68%
Gross Profit Margin 71.50% 71.13%
Operating Profit Margin 9.48% 9.44%
Basic Earning Power 14.01% 12.79%
ROCE 18.75% 16.91%
Capital Employed                 4,085            4,003
ROIC 31.70% 21.77%

Call or Text Paul, Doctoral Candidate, MBA.

321-948-9588

Email: Paulb@QualityBusinessPlan.com

Hours of Operation: 7 Days a week 8am to 9pm EST.

Our business plan writers are located in Orlando, Fl. We have researched and written business plans for numerous businesses in the US.