7752 · Ricoh

Will it survive?

• Can it pay its interest? 8.3×
  Comfortable
  Operating income ¥90.7B ÷ interest expense ¥10.9B
  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? ¥315.5B · 3.5× operating profit
  Meaningful net debt
  Cash ¥204.9B − debt ¥520.3B
  What this means

  Netting ¥204.9B of cash and short-term investments against ¥520.3B of debt leaves ¥315.5B owed, about 3.5× a year's operating profit (5.7× 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? 17d
  Tight
  DSO 82 + DIO 8 − DPO 73 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 4%
  Below average through the cycle
  10-yr median, range -6%–7%; 5% latest = NOPAT ¥71.7B ÷ invested capital ¥1.47T
  Industry peers: median 3%
  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 5% 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 3%
  Thin through the cycle
  9-yr median margin, range 0%–5%; latest ¥109.2B = operating cash ¥158.1B − maintenance capex ¥48.9B
  Industry peers: median 5%
  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 4% of revenue this year, a 3% median across 9 years.

• Are earnings backed by cash? 2.84×
  Cash-backed
  Cash from ops ¥158.1B ÷ net income ¥55.7B
  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? 20%
  Reinvests most of it
  Dividends + buybacks ¥22.2B ÷ Owner Earnings ¥109.2B — this fiscal year
  What this means

  Of ¥109.2B Owner Earnings, ¥22.2B (20%) went back to shareholders, ¥22.2B dividends, ¥7M 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. This year's proportion is 20%; across the record (2018–2026) it is 70%, the capital-allocation section below.

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

  Through the cycle the operating margin widened — about −1% early to 3% lately, median 3% — 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.

• Owner earnings growth +19%/yr
  What this means

  Owner earnings grew about 19% a year over the record.

• Worst year 2018 · −5.6% op. margin
  What this means

  Operations went underwater in 2018, understand why before trusting the good years.

• Share count −2.9%/yr
  What this means

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

• Dividend record paid
  What this means

  Paid a dividend in 10 of the years on record.