In order to evaluate these two companies, I have prepared common-sized financial statements and computed key ratios that will be used to show and further analyze these fundamental differences. Regarding their respective 2007 income statements, Darden Restaurants had the higher gross profit margin (23.5% compared to the 16.4% reported by Brinker International, Inc.) as well as book value of shareholders equity. Darden Restaurants' higher gross margin reflects the greater efficiency with which it is able to turn investors' money into income for the company. This efficiency is also shown in the higher operating income margin for Darden Restaurants (10.3% compared to the 7.9% by Brinker International, Inc.). The higher operating income margin also signifies that Darden has comparatively lower fixed costs, thereby giving its' management more flexibility in determining prices. This pricing flexibility provides an added measure of safety for the company during tough economic times for Darden Restaurants.