8001 · Itochu

Will it survive?

• Can it pay its interest? —
  Not the right lens here
  What this means

  This business earns through equity-method affiliates, so interest coverage on its operating line isn't meaningful. Read its solvency on net debt against equity instead.

• How heavy is the debt, net of cash? ¥4.16T · 126.7× operating profit
  Heavy net debt
  Cash ¥593.8B − debt ¥4.76T
  What this means

  Netting ¥593.8B of cash and short-term investments against ¥4.76T of debt leaves ¥4.16T owed, about 126.7× a year's operating profit (144.7× 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 —
  Operating income not meaningful here
  Industry peers: median 16%
  What this means

  This business earns mostly through equity-method affiliates, so its operating line understates its earning power and a ROIC built on it would mislead. Read it on return on equity and the record instead.

• Owner-earnings margin 5%
  Solid through the cycle
  9-yr median margin, range 3%–7%; latest ¥846.8B = operating cash ¥1.13T − maintenance capex ¥285.0B
  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 6% of revenue this year, a 5% median across 9 years.

• Are earnings backed by cash? 1.26×
  Cash-backed
  Cash from ops ¥1.13T ÷ net income ¥900.3B
  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? 53%
  Returns about half
  Dividends + buybacks ¥452.7B ÷ Owner Earnings ¥846.8B
  What this means

  Of ¥846.8B Owner Earnings, ¥452.7B (53%) went back to shareholders, ¥282.7B dividends, ¥170.1B 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? —
  Not enough data
  What this means

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

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% 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 0% → 0% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 0% early, 0% lately, median 0%.

• Reinvestment, incremental ROIC 0%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth +12%/yr
  What this means

  Owner earnings grew about 12% a year over the record.

• Worst year 2020 · −0.0% op. margin
  What this means

  Operations went underwater in 2020, understand why before trusting the good years.

• Dividend record rising
  What this means

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