⚠ A Company Estimate of Its Own CostLow threat

ITOCHU (8001) — threat to the moat

A company's own estimate of its cost of capital is only as good as its assumptions about interest rates.

The cost of capital of approximately 8%1 is ITOCHU's own estimate. Rising Japanese interest rates raise the cost of both debt and equity, and a company's estimate of its own cost of capital may lag.

Interest coverage (times, years to March)8.320247.820257.72026ITOCHU FIR 2026
Coverage is slipping slowly.

ITOCHU's interest expense was ¥105,610 million in the latest year2, and its interest coverage 7.7 times3.

ITOCHU uses country-risk discount rates of about 5-17% in its impairment testing4, higher for riskier countries. The single 8% figure is an average across very different businesses.

The measure is whether the company revises the figure upward. A higher stated cost with an unchanged ROE would narrow the spread.

References
  1. ReportedThe cost of capital of approximately 8% is ITOCHU's own estimate.
    ITOCHU Corporation, CFO message, Integrated Report 2026 - the cost of capital of approximately 8%, about 70 business-specific hurdle rates, and the aim to sustain ROE at the 15% level. — 2026 · publ. July 2026 · source ↗
  2. ReportedITOCHU's interest expense was ¥105,610 million in the latest year, and its interest coverage 7.7 times.
    ITOCHU Corporation, Consolidated Financial Results for the year ended March 31, 2026 (IFRS) - statements of comprehensive income, financial position and cash flows, the segment information by eight division companies, the share split, dividends, the buyback plan and the forecast for the year to March 2027. — FY to March 2026 · publ. 1 May 2026 · source ↗
  3. ReportedITOCHU's interest expense was ¥105,610 million in the latest year, and its interest coverage 7.7 times.
    ITOCHU Corporation, Financial Information Report 2026 - the audited financial statements, segment information, the customer statement, goodwill including FamilyMart, CITIC and the risk factors. — FY to March 2026 · publ. 12 June 2026 · source ↗
  4. ReportedITOCHU uses country-risk discount rates of about 5-17% in its impairment testing, higher for riskier countries.
    ITOCHU Corporation, Financial Information Report 2026 - the audited financial statements, segment information, the customer statement, goodwill including FamilyMart, CITIC and the risk factors. — FY to March 2026 · publ. 12 June 2026 · source ↗
Sources
Generated September 24, 2026