META — Meta Platforms Inc.

Will it survive?

• Can it pay its interest? 71.5×
  Comfortable
  Operating income $83.3B ÷ interest expense $1.2B

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient — it says solvent, not cheap.

• How heavy is the debt? 0.7×
  Conservative
  Total debt $58.7B ÷ operating income $83.3B

  Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.

• How long is cash tied up? -54d
  Negative — funded by others
  DSO 36 + DIO 0 − DPO 90 days

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”) — the company grows on other people's money. (Little or no inventory — a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

• Return on invested capital 24%
  High
  NOPAT $58.6B ÷ invested capital $240.1B (debt + equity − cash)

  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; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 23%
  Cash machine
  Owner Earnings $46.1B = operating cash $115.8B − capex $69.7B

  What an owner could take out without starving the business. That's 23% of revenue. Treating stock comp as the real expense it is (less $20.4B of SBC) leaves $25.7B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? 1.92×
  Cash-backed
  Cash from ops $115.8B ÷ net income $60.5B

  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? 68%
  Returns about half
  Dividends + buybacks $31.6B ÷ Owner Earnings $46.1B

  Of $46.1B Owner Earnings, $31.6B (68%) went back to shareholders — $5.3B dividends, $26.2B buybacks. Net of $20.4B stock comp, the real buyback was about $5.8B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway — or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 3.74×
  Expanding
  Capex $69.7B ÷ depreciation $18.6B

  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.

Durability & moat — 2016–2025

A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says — judgments, not another chart of the numbers.

• Profitable years 10 of 10

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

• Return on capital ≥ 15% 5 of 5 yrs

  A moat shows up as a high return on invested capital that holds year after year — not one good vintage.

• Operating margin 47% → 42%

  Margins are slipping — competition or costs are biting in.

• Reinvestment — incremental ROIC 62%

  Every extra dollar the company reinvested earned a high return — it is still compounding, not coasting on an old moat.

• Owner earnings growth +15%/yr

  Free cash to owners grew about 15% a year over the record.

• Worst year 2022 · 24.8% op. margin

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

• Share count −1.4%/yr

  The share count is shrinking — buybacks are quietly growing your slice of the business.

• Dividend record paid

  Paid a dividend in 2 of the years on record.