8053 · Sumitomo Corp.

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? ¥3.55T
  Net debt
  Cash ¥1.01T + ST investments ¥150.6B − debt ¥4.71T
  What this means

  Netting ¥1.16T of cash and short-term investments against ¥4.71T of debt leaves ¥3.55T owed. 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%
  Thin through the cycle
  9-yr median margin, range 2%–10%; latest ¥707.5B = operating cash ¥813.5B − maintenance capex ¥105.9B
  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 10% of revenue this year, a 5% median across 9 years.

• Are earnings backed by cash? 1.36×
  Cash-backed
  Cash from ops ¥813.5B ÷ net income ¥600.3B
  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? 34%
  Reinvests most of it
  Dividends + buybacks ¥242.9B ÷ Owner Earnings ¥707.5B
  What this means

  Of ¥707.5B Owner Earnings, ¥242.9B (34%) went back to shareholders, ¥162.9B dividends, ¥80.0B 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? —
  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 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• 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 −1% → −1% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about −1% early, −1% lately, median −1%.

• Reinvestment, incremental ROIC −0%
  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 +17%/yr
  What this means

  Owner earnings grew about 17% a year over the record.

• Worst year 2021 · −2.6% op. margin
  What this means

  Operations went underwater in 2021, understand why before trusting the good years.

• Share count −0.4%/yr
  What this means

  Roughly flat share count, little dilution, little buyback.

• Dividend record rising
  What this means

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