7751 · Canon

Will it survive?

• Can it pay its interest? 18.7×
  Comfortable
  Operating income ¥178.2B ÷ interest expense ¥9.5B
  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? ¥906.9B · 5.1× operating profit
  Heavy net debt
  Cash ¥20.5B − debt ¥927.4B
  What this means

  Netting ¥20.5B of cash and short-term investments against ¥927.4B of debt leaves ¥906.9B owed, about 5.1× a year's operating profit (5.2× 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 4%
  Below average through the cycle
  10-yr median, range -1%–7%; 6% latest = NOPAT ¥140.8B ÷ invested capital ¥2.43T
  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 6% 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 —
  Not enough data
  Industry peers: median 2%
  What this means

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

• Are earnings backed by cash? —
  Not enough data
  What this means

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

How is the cash used?

• Where do the earnings go? —
  Not enough data
  What this means

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

• Investing or harvesting? —
  Not enough data
  What this means

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

Durability & moat, 2016–2025

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% 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 7% → 10% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 7% early to 10% lately, median 7% — 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.

• Worst year 2020 · −2.4% op. margin
  What this means

  Operations went underwater in 2020, 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.