6723 · Renesas Electronics

Will it survive?

• Can it pay its interest? 0.8×
  Does not cover its interest
  Operating income ¥201.2B ÷ interest expense ¥245.6B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? —
  Debt under-captured — leverage unknown, not low
  What this means

  This company pays far more interest than its tagged debt implies (the rest sits under segment dimensions the data source strips), so its net cash or net debt cannot be read honestly: the gap is unknown, not zero, and 'net cash' here would be exactly the fiction the figure is meant to prevent. Judge it on the record and owner earnings instead.

• How long is cash tied up? -94d
  Negative, funded by others
  DSO 47 + DIO 0 − DPO 141 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

• Return on invested capital —
  Debt under-captured
  Industry peers: median 21%
  What this means

  This company's interest bill implies far more debt than its filings tag at the consolidated level (the rest sits under segment dimensions the data source strips), so invested capital, and the return on it, cannot be read honestly. Judge this one on Owner Earnings and the record instead.

• Owner-earnings margin 23%
  High through the cycle
  10-yr median margin, range 12%–28%; latest ¥363.7B = operating cash ¥452.9B − maintenance capex ¥89.2B
  Industry peers: median 36%
  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 28% of revenue this year, a 23% median across 10 years.

• Are earnings backed by cash? ¥452.9B
  Loss, but cash-generative
  Net income (¥51.8B) · cash from operations ¥452.9B
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? 14%
  Reinvests most of it
  Dividends + buybacks ¥50.3B ÷ Owner Earnings ¥363.7B
  What this means

  Of ¥363.7B Owner Earnings, ¥50.3B (14%) went back to shareholders, ¥50.3B dividends, ¥0 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? 0.47×
  Harvesting
  Capex ¥89.2B ÷ depreciation ¥188.6B
  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, 2016–2025

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

• Profitable years 8 of 10
  What this means

  Lost money in 2 year(s), look at what happened there before trusting the average.

• Operating margin 11% → 19% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 11% early to 19% lately, median 12% — pricing power intact or improving.

• Owner earnings growth +15%/yr
  What this means

  Owner earnings grew about 15% a year over the record.

• Worst year 2019 · 0.9% op. margin
  What this means

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

• Share count +1.3%/yr
  What this means

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

• Dividend record paid
  What this means

  Paid a dividend in 2 of the years on record.