6146 · Disco

Will it survive?

• Can it pay its interest? —
  No meaningful interest burden
  Little or no interest expense reported
  What this means

  Little or no interest expense reported, the business isn't leaning on lenders to operate.

• How heavy is the debt, net of cash? +¥184.6B
  Net cash, debt-free
  Cash ¥184.6B − debt ¥0
  What this means

  Cash and short-term investments exceed every dollar of debt by ¥184.6B, 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? 128d
  Long (60+ days)
  DSO 44 + DIO 109 − DPO 25 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 —
  Not enough data
  Industry peers: median 8%
  What this means

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

• Owner-earnings margin 27%
  High through the cycle
  10-yr median margin, range 14%–30%; latest ¥118.7B = operating cash ¥133.5B − maintenance capex ¥14.8B
  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 27% of revenue this year, a 27% median across 10 years. It chose to put ¥20.3B more into growth, so free cash flow this year was ¥98.4B — the gap is investment, not weakness.

• Are earnings backed by cash? 0.99×
  Mostly cash-backed
  Cash from ops ¥133.5B ÷ net income ¥135.5B
  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? 38%
  Reinvests most of it
  Dividends + buybacks ¥45.3B ÷ Owner Earnings ¥118.7B
  What this means

  Of ¥118.7B Owner Earnings, ¥45.3B (38%) went back to shareholders, ¥45.3B dividends, ¥1M 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? 2.37×
  Expanding
  Capex ¥35.1B ÷ depreciation ¥14.8B
  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.

• Operating margin 27% → 41% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 27% early to 41% lately, median 30% — pricing power intact or improving.

• 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 +14%/yr
  What this means

  Owner earnings grew about 14% a year over the record.

• Worst year 2017 · 23.4% 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.