Canon 2006 Annual Report Download - page 51

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49
Working capital in fiscal 2006 increased ¥239,101 million
(U.S.$2,009 million), to ¥1,619,042 million (U.S.$13,605 mil-
lion), compared with ¥1,379,941 million in fiscal 2005 and
¥1,248,987 million in fiscal 2004. This increase was primarily a
result of an increase in cash and cash equivalents. Canon
believes its working capital will be sufficient for its requirements
for the foreseeable future. Canon’s capital requirements are
primarily dependent on management’s business plans regarding
the levels and timing of capital expenditures and investments.
The working capital ratio (ratio of current assets to current
liabilities) for fiscal 2006 was 2.39 compared to 2.28 for fiscal
2005 and 2.27 for fiscal 2004.
Return on assets (Net income divided by the average of total
assets as of December 31, 2006, 2005 and 2004) recorded
10.6% in fiscal 2006, compared to 10.1% in fiscal 2005 and
10.1% in fiscal 2004.
Return on stockholders’ equity was 16.3% in fiscal 2006
compared with 16.0% in fiscal 2005 and 16.8% in fiscal 2004.
Debt to total assets ratio was 0.7%, 0.8% and 1.1% as of
December 31, 2006, 2005 and 2004, respectively. Canon had
short-term loans and long-term debt of ¥31,151 million as of
December 31, 2006, ¥32,141 million as of December 31, 2005
and ¥38,530 million as of December 31, 2004.
OFF-BALANCE SHEET ARRANGEMENTS
As part of its ongoing business, Canon does not participate in
transactions that generate relationships with unconsolidated
entities or financial partnerships, such as entities often referred
to as structured finance or special purpose entities, which
would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow
or limited purposes.
Canon provides guarantees to third parties of bank loans
of its employees, affiliates and other companies. Canon would
have to perform under a guarantee, if the borrower defaults on
apayment within the contract periods of 1 year to 30 years in
the case of employees with housing loans, and of 1 year to 10
years in the case of affiliates and other companies. The maxi-
mum amount of undiscounted payments Canon would have had
to make in the event of default by all borrowers was ¥30,051
million (U.S.$253 million) at December 31, 2006. The carrying
amounts of the liabilities recognized for Canon’s obligations as
aguarantor under those guarantees are insignificant.
Working Capital Ratio
2.5
0
02 03 04 05 06
2.13
2.33 2.27 2.28 2.39
Return on Stockholders’ Equity
(%)
20
0
02 03 04 05 06
12.5
15.9 16.8 16.0 16.3