Canon 2005 Annual Report Download - page 49

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47
Working capital in fiscal 2005 increased ¥130,954 million
(U.S.$1,110 million), to ¥1,379,941 million (U.S.$11,694 mil-
lion), compared with ¥1,248,987 million in fiscal 2004 and
¥1,103,474 million in fiscal 2003. This increase was primarily a
result of an increase in cash and cash equivalents. Canon
believes its working capital will be sufficient for its require-
ments 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 2005 was 2.28 compared to 2.27
for fiscal 2004 and 2.33 for fiscal 2003.
Return on assets (Net income divided by the average of total
assets as of December 31, 2005, 2004 and 2003) recorded
10.1% in fiscal 2005, compared to 10.1% in fiscal 2004 and
9.0% in fiscal 2003.
Return on stockholders’ equity was 16.0% in fiscal 2005
compared with 16.8% in fiscal 2004 and 15.9% in fiscal 2003.
Debt to total assets ratio was 0.8%, 1.1% and 3.1% as of
December 31, 2005, 2004 and 2003, respectively. Canon had
short-term loans and long-term debt of ¥32,141 million as of
December 31, 2005, ¥38,530 million as of December 31, 2004
and ¥98,396 million as of December 31, 2003.
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 maxi-
mum amount of undiscounted payments Canon would have
had to make in the event of default by all borrowers was
¥38,550 million (U.S.$327 million) at December 31, 2005. The
carrying amounts of the liabilities recognized for Canon’s
obligations as a guarantor under those guarantees are
insignificant.
2.5
0
Working Capital Ratio
01 02 03 04 05
1.91
2.13
2.33 2.27 2.28
20
0
Return on Stockholders’ Equity
(%)
01 02 03 04 05
12.2 12.5
15.9 16.8 16.0