8233 · Takashimaya

Will it survive?

• Can it pay its interest? 6.9×
  Comfortable
  Operating income ¥53.5B ÷ interest expense ¥7.8B
  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? ¥337.0B · 6.3× operating profit
  Heavy net debt
  Cash ¥77.4B − debt ¥414.5B
  What this means

  Netting ¥77.4B of cash and short-term investments against ¥414.5B of debt leaves ¥337.0B owed, about 6.3× a year's operating profit (7.7× 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? -7d
  Negative, funded by others
  DSO 178 + DIO 67 − DPO 251 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.

Is it a good business?

• Return on invested capital 4%
  Below average through the cycle
  10-yr median, range -2%–7%; 6% latest = NOPAT ¥42.3B ÷ invested capital ¥732.7B
  Industry peers: median 7%
  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 2%
  Thin, recently turned positive
  latest ¥8.6B = operating cash ¥53.8B − maintenance capex ¥45.2B; positive each of the last 3 years, after an earlier loss stretch (10-yr median 2%)
  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 2% of revenue this year, a 2% median across 10 years.

• Are earnings backed by cash? ¥53.8B
  Loss, but cash-generative
  Net income (¥8.2B) · cash from operations ¥53.8B
  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? 279%
  Returned more than it generated
  Dividends + buybacks ¥24.0B ÷ Owner Earnings ¥8.6B
  What this means

  The company returned more than it generated: against ¥8.6B of Owner Earnings, ¥24.0B (279%) went back to shareholders, ¥9.0B dividends, ¥15.0B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.

• Investing or harvesting? 1.34×
  Expanding
  Capex ¥45.2B ÷ depreciation ¥33.8B
  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 8 of 10
  What this means

  Lost money in 2 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 4% → 13% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 4% early to 13% lately, median 4% — pricing power intact or improving.

• Reinvestment, incremental ROIC 8%
  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.

• Worst year 2021 · −2.2% op. margin
  What this means

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

• Share count −1.7%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record rising
  What this means

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