2802 · Ajinomoto

Will it survive?

• Can it pay its interest? 23.5×
  Comfortable
  Operating income ¥199.4B ÷ interest expense ¥8.5B
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? ¥422.3B · 2.1× operating profit
  Meaningful net debt
  Cash ¥106.7B − debt ¥529.0B
  What this means

  Netting ¥106.7B of cash and short-term investments against ¥529.0B of debt leaves ¥422.3B owed, about 2.1× a year's operating profit (2.7× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 9%
  Solid through the cycle
  10-yr median, range -0%–17%; 13% latest = NOPAT ¥157.5B ÷ invested capital ¥1.19T
  Industry peers: median 16%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 13% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 7%
  Solid through the cycle
  9-yr median margin, range 4%–9%; latest ¥142.9B = operating cash ¥239.4B − maintenance capex ¥96.4B
  Industry peers: median 2%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 9% of revenue this year, a 7% median across 9 years.

• Are earnings backed by cash? 1.78×
  Cash-backed
  Cash from ops ¥239.4B ÷ net income ¥134.7B
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 121%
  Returned more than it generated
  Dividends + buybacks ¥173.2B ÷ Owner Earnings ¥142.9B
  What this means

  The company returned more than it generated: against ¥142.9B of Owner Earnings, ¥173.2B (121%) went back to shareholders, ¥43.2B dividends, ¥130.0B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.

• Investing or harvesting? 1.08×
  Maintaining
  Capex ¥96.4B ÷ depreciation ¥88.9B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 10 of 10
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• Return on capital ≥ 15% 2 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 4% → 10% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 4% early to 10% lately, median 7% — pricing power intact or improving.

• Reinvestment, incremental ROIC 35%
  What this means

  Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.

• Owner earnings growth +8%/yr
  What this means

  Owner earnings grew about 8% a year over the record.

• Worst year 2017 · −0.4% op. margin
  What this means

  Operations went underwater in 2017, understand why before trusting the good years.

• Share count +6.1%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.