Analysis Case $10-4$ Fixed$-$asset turnover ratio; Darden Restaurants,

Inc. LO$10-5$

Real World Financials

Darden Restaurants, Inc., is a full$-$service restaurant company, including brands

such as Olive Garden, LongHorn Steakhouse, and Bahama Breeze. The company's

fixed$-$asset turnover ratio, using the average book value of property, plant, and

equipment $($PP&E$)$ as the denominator, was approximately $2\mathrm{.}94.$ Additional

information taken from the company's annual report is as follows:

Book value of PP&E$-$beginning of the year

Net purchases of PP&E during the year$*$

Depreciation of PP&E for the yearAnalysis Case $10-4$ Fixed$-$asset turnover ratio; Darden Restaurants,

Inc. $$ LO$10-5$

Real World Financials

Darden Restaurants, Inc., is a full$-$service restaurant company, including brands

such as Olive Garden, LongHorn Steakhouse, and Bahama Breeze. The company's

fixed$-$asset turnover ratio, using the average book value of property, plant, and

equipment $($PP&E$)$ as the denominator, was approximately $2\mathrm{.}94.$ Additional

information taken from the company's annual report is as follows:

Required:

How is the fixed$-$asset turnover ratio computed? If the industry average ratio is

$4\mathrm{.}0,$ would Darden's ratio be considered more or less favorable?

Use the data to determine Darden's net sales for the year.

$($$ in millions$)$

$$2,552\mathrm{.}6$

$454\mathrm{.}1$

$249\mathrm{.}8$

$*$Net purchases include book value of equipment purchased minus book value of equipment

sold.

Required:

$1.$ How is the fixed$-$asset turnover ratio computed? If the industry average ratio is

$4\mathrm{.}0,$ would Darden's ratio be considered more or less favorable?

$2.$ Use the data to determine Darden's net sales for the year.