Capital allocation using ROI, IRR and cost of capital
First written in FY2016. 1 of 5 entries say "Reframed", first in FY2018. Latest entry: FY2026.
The whole theme swung hardest in 2021: 4 of 13 companies on the "Worse" side.
29 other companies' latest entry also says "Advanced".
- FY2026AdvancedAnnual report
「For the consolidated fiscal year, the net interest-bearing debt ratio (net D/E ratio) was △48.30%, ROA was 6.62%, and ROE was 14.42%. For the foreseeable future, we recognize that improving these indicators, together with achieving the consolidated operating profit plan, is the top priority.」
The Group maintained its policy of treating the net D/E ratio, ROA and ROE as important indicators and disclosed the current fiscal year’s results for each. Achieving the operating profit plan and improving the indicators are priority issues. - FY2021WorsenedAnnual report
「For the consolidated fiscal year, the net interest-bearing debt ratio (net D/E ratio) was 195.3%, ROA was △22.4%, and ROE was △132.7%. However, we recognize that improving the operating margin is the top priority for the foreseeable future.」
While maintaining its emphasis on the key indicators, the Group’s net D/E ratio was 195.3%, ROA was negative 22.4%, and ROE was negative 132.7%, indicating deterioration in the indicators. It continued to prioritize improving the operating margin. - FY2020Prioritizing operating margin improvement as indicators deteriorateAnnual report
「For the consolidated fiscal year, the net interest-bearing debt ratio (net D/E ratio) was △8.5%, ROA was △0.22%, and ROE was △27.5%. However, we recognize that improving the operating margin is the top priority for the foreseeable future.」
While maintaining the policy of treating the net D/E ratio, ROA and ROE as important indicators, the Group explicitly identified improving the operating margin as its immediate priority. - FY2018ReframedAnnual report
「The Group believes that maintaining sound and stable management, improving asset efficiency and making effective use of shareholders’ equity will benefit all stakeholders, and has positioned the net interest-bearing debt ratio (net D/E ratio), return on assets (ROA) and return on equity (ROE) as important indicators.」
The stated framework shifted from a policy based on ROI, IRR and the cost of capital to one placing greater emphasis on the net D/E ratio, ROA and ROE. - FY2016First statedAnnual report
「We will establish criteria such as return on invested capital (ROI) and internal rate of return (IRR) in line with the characteristics of each business and manage the businesses with an emphasis on investment efficiency. At the same time, we will use indicators such as the cost of capital as criteria for capital allocation and decisions on business expansion or withdrawal, seeking to maximize capital efficiency.」
The policy is to use investment efficiency and the cost of capital as criteria for decisions on business expansion, withdrawal and capital allocation.