Canon 2004 Annual Report Download - page 45

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43
Working capital in fiscal 2004 increased ¥145,513 million
(U.S.$1,399 million), to ¥1,248,987 million (U.S.$12,009
million), compared with ¥1,103,474 million in fiscal 2003 and
¥903,134 million in fiscal 2002. This increase was primarily a
result of an increase in cash and cash equivalents and a
decrease in short-term loans. 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 2004 was 2.27, compared to 2.33 for fiscal
2003 and 2.13 for fiscal 2002.
Return on assets (Net income divided by the average of total
assets as of December 31, 2004, 2003 and 2002) increased to
10.1% in fiscal 2004, compared to 9.0% in fiscal 2003 and
6.6% in fiscal 2002. This increase was due mainly to an
increase in net income.
Return on stockholders’ equity increased to 16.8% in fiscal
2004, compared with 15.9% in fiscal 2003 and 12.5% in
fiscal 2002.
Debt to total assets ratio was 1.1%, 3.1% and 5.0% as of
December 31, 2004, 2003 and 2002, respectively. Canon had
short-term loans and long-term debt of ¥38,530 million as of
December 31, 2004, ¥98,396 million as of December 31,
2003 and ¥148,103 million as of December 31, 2002.
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 a payment 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
maximum amount of undiscounted payments Canon would
have had to make in the event of default by all borrowers was
¥43,634 million (U.S.$420 million) at December 31, 2004. The
carrying amounts of the liabilities recognized for Canon’s
obligations as a guarantor under those guarantees are
insignificant.
Working capital ratio
2.5
0
1.71
2.27
2.13
2.33
1.91
0400 01 02 03
Return on stochholder's equity
(%)
16
0
0400 01 02 03
16.8
10.7
12.5
15.9
12.2