y tied up in one of its least liquid assets. The receivable turnover of Darden Restaurants, Inc. is much higher (153.3) than the competitors' average (82.24). This demonstrates that Darden has collected their outstanding credit accounts and loaned them more frequently than competitors. Moving away from specific accounts like inventory or receivables, we can consider as an important "big" picture ratio, the total asset turnover ratio. In this case, the competitors' average (15.71) is much higher than Darden's (1.9). This tells us that Darden generated smaller return on sales than the competitors did for every dollar in asset. However, the competitors' high total asset turnover is not the median but just the average. Advantica, one of the competitors, has a remarkably high ratio (100.7), which resulted in high market average. Thus, Darden's financial condition cannot be confirmed with this figure alone.Leverage RatiosTime interest earned by Darden, (11.65), is higher than the average of the seven competitors, (5.07). Darden has the above-average ability to cover interest payment from operating profits. Dardens fixed charge coverage is 10.65. This is below the average of the competitors. Debt to total assets is 0.49, which is a little higher than 0.4, the average of the competitors. But, this is because Darden attempts to decrease inventory and net receivables, which makes total assets small. Overall, Dardens extent of debt financing is sound.Du Pont Identity AnalysisAccording to the Du Pont Ratio, Darden Restaurant, Inc.s operating efficiency, asset use efficiency and financial leverage are figured out from 1996 to 1999. Darden restaurants operating efficiency (profit margin) has been increasing: 2.3%(1996) -2.87%(1997) 3.1(1998)4.1%(1999). These increasing ratios show that Darden Restaurant, Inc.s profitability has consistently increased. The asset use of efficiency (total asset turnover) has also increased: 1.53(1996)1.62(1...
