CRM, Salesforce Inc.

Will it survive?

• Can it pay its interest? —
  Interest expense not tagged in the data
  What this means

  No usable interest-expense line was tagged in the filing data, but the balance sheet carries real net debt — so the interest burden here is unknown, not absent. Read the debt on the net-debt check below.

• How heavy is the debt, net of cash? $7.1B · 0.9× operating profit
  Modest net debt
  Cash $7.3B − debt $14.4B
  What this means

  Netting $7.3B of cash and short-term investments against $14.4B of debt leaves $7.1B owed, about 0.9× a year's operating profit (1.7× 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? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 3%
  Below average through the cycle
  10-yr median, range 0%–10%; 10% latest = NOPAT $6.5B ÷ invested capital $66.3B
  Industry peers: median 16%
  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 10% 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 22%
  High through the cycle
  10-yr median margin, range 19%–35%; latest $14.4B = operating cash $15.0B − maintenance capex $594M
  Industry peers: median 30%
  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 35% of revenue this year, a 22% median across 10 years. Treating stock comp as the real expense it is (less $3.5B of SBC) leaves $10.9B.

• Are earnings backed by cash? 2.01×
  Cash-backed
  Cash from ops $15.0B ÷ net income $7.5B
  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? 98%
  Returns most of it
  Dividends + buybacks $14.2B ÷ Owner Earnings $14.4B — this fiscal year
  What this means

  Of $14.4B Owner Earnings, $14.2B (98%) went back to shareholders, $1.6B dividends, $12.6B buybacks. Net of $3.5B stock comp, the real buyback was about $9.1B. 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 98%; across the record (2017–2026) it is 56%, the capital-allocation section below.

• Investing or harvesting? 0.49×
  Harvesting
  Capex $594M ÷ depreciation $1.2B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

The promise and the pay packet

• How much of next year is already sold? 85%
  Most of next year is contracted
  Contracted and not yet earned $72.4B, of which the filing expects 48% within twelve months = $35.1B against revenue of $41.5B
  What this means

  Remaining performance obligations are revenue the customer has committed to and the company has not yet earned — the nearest thing a software business has to an insurer's float. The headline total is a duration figure and can mislead badly on its own, because a contract signed for seven years counts the same as one signed for one. What matters is the part the filing itself expects to recognise within twelve months, shown here against a year of revenue. Where a company does not tag that band, both figures are withheld rather than shown half-told.

• What does winning a customer cost? 35%
  Heavy selling cost
  Selling and marketing $14.3B ÷ revenue $41.5B
  What this means

  Sales and marketing as a share of revenue, kept apart from administrative overhead because it answers a different question: how much a business must spend to win the next customer. A company whose product pulls customers in spends little here and keeps the difference; one that must buy its growth is running to stand still, and the spending has to keep rising for revenue to keep rising. Read it beside the growth rate, not alone.

• Is the buyback buying ownership, or mopping up? 8.5%
  The count is edging down
  Stock compensation $3.5B (fiscal 2026), 8.5% of revenue · repurchases $12.6B · diluted shares -4.1% since 2023
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Pass
  Revenue ≥ $2B · $41.5B
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Miss
  Current ratio ≥ 2× · 0.76×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Miss
  Debt ≤ working capital · $14.4B vs ($8.9B) WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Earnings stability Pass
  A profit every year (10-yr record) · no losses
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Miss
  Uninterrupted dividends · 2 of 10 yrs
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Pass
  Earnings +33% over the record · +892%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $7.24/share (latest year $9.11), the averaged base the calculator's gate runs on, and book value is $72.21/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 10 of 10
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• 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 4% → 18% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 4% early to 18% lately, median 3% — pricing power intact or improving.

• Reinvestment, incremental ROIC 10%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth +23%/yr
  What this means

  Owner earnings grew about 23% a year over the record.

• Worst year 2020 · 1.7% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Share count +3.5%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• Dividend record paid
  What this means

  Paid a dividend in 2 of the years on record.