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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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% | |||
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