4902 · Konica Minolta

Will it survive?

• Can it pay its interest? 4.4×
  Adequate
  Operating income ¥49.9B ÷ interest expense ¥11.3B
  What this means

  Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.

• How heavy is the debt, net of cash? ¥287.5B · 5.8× operating profit
  Heavy net debt
  Cash ¥110.8B − debt ¥398.3B
  What this means

  Netting ¥110.8B of cash and short-term investments against ¥398.3B of debt leaves ¥287.5B owed, about 5.8× a year's operating profit (8.0× 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? 38d
  Tight
  DSO 106 + DIO 35 − DPO 103 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 0%
  Below average through the cycle
  10-yr median, range -9%–7%; 5% latest = NOPAT ¥39.4B ÷ invested capital ¥824.1B
  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 5% 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 4%
  Thin, recently turned positive
  latest ¥38.4B = operating cash ¥86.3B − maintenance capex ¥47.9B; positive each of the last 3 years, after an earlier loss stretch (9-yr median 2%)
  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 4% of revenue this year, a 2% median across 9 years.

• Are earnings backed by cash? 2.85×
  Cash-backed
  Cash from ops ¥86.3B ÷ net income ¥30.3B
  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? 7%
  Reinvests most of it
  Dividends + buybacks ¥2.8B ÷ Owner Earnings ¥38.4B
  What this means

  Of ¥38.4B Owner Earnings, ¥2.8B (7%) went back to shareholders, ¥2.4B dividends, ¥398M buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 0.82×
  Maintaining
  Capex ¥47.9B ÷ depreciation ¥58.7B
  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 5 of 10
  What this means

  Lost money in 5 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 0 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% → 0% (3-yr avg ends)
  What this means

  The recent-years average (0%) sits below the early years (4%), but the latest year (5%) is back near the early level: a cyclical trough dragging the window down, not a one-way slide. The through-cycle median is 0% — read it across the cycle, not on the dip.

• Reinvestment, incremental ROIC returns capital
  What this means

  The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.

• Owner earnings growth +1%/yr
  What this means

  Owner earnings grew about 1% a year over the record.

• Worst year 2023 · −8.4% op. margin
  What this means

  Operations went underwater in 2023, understand why before trusting the good years.

• Share count +0.0%/yr
  What this means

  Roughly flat share count, little dilution, little buyback.

• Dividend record paid
  What this means

  Paid a dividend in 10 of the years on record.