6103 · Okuma

Will it survive?

• Can it pay its interest? 102.0×
  Comfortable
  Operating income ¥15.5B ÷ interest expense ¥152M
  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? +¥22.8B
  Net cash
  Cash ¥47.8B − debt ¥25.0B
  What this means

  Cash and short-term investments exceed every dollar of debt by ¥22.8B, on net the company owes nothing, and can act from strength when others can't. 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? 217d
  Long (60+ days)
  DSO 69 + DIO 180 − DPO 32 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 9%
  Solid through the cycle
  10-yr median, range 3%–18%; 7% latest = NOPAT ¥12.2B ÷ invested capital ¥177.1B
  Industry peers: median 8%
  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 7% 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 5%
  Thin through the cycle
  10-yr median margin, range -0%–14%; latest ¥14.5B = operating cash ¥23.8B − maintenance capex ¥9.3B
  Industry peers: median 7%
  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 6% of revenue this year, a 5% median across 10 years. It chose to put ¥14.6B more into growth, so free cash flow this year was (¥108M) — the gap is investment, not weakness.

• Are earnings backed by cash? 1.90×
  Cash-backed
  Cash from ops ¥23.8B ÷ net income ¥12.6B
  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? 76%
  Returns about half
  Dividends + buybacks ¥11.1B ÷ Owner Earnings ¥14.5B
  What this means

  Of ¥14.5B Owner Earnings, ¥11.1B (76%) went back to shareholders, ¥6.0B dividends, ¥5.0B 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? 2.58×
  Expanding
  Capex ¥23.9B ÷ depreciation ¥9.3B
  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 12% → 8% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 12% early to 8% lately, median 9% — competition or costs are biting in.

• Reinvestment, incremental ROIC −4%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

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

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

• Worst year 2021 · 3.9% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Dividend record rising
  What this means

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