Northspread
Formula sheet/NISM Series XV: Research Analyst/Company Analysis - Financial Analysis
[ COMPANY ANALYSIS - FINANCIAL ANALYSIS ]

Working Capital Metrics

Net Working Capital(NWC)=Current Assets−Current Liabilities\text{Net Working Capital} (NWC) = \text{Current Assets} - \text{Current Liabilities}
Core Working Capital=Inventory+Trade Receivables−Trade Payables\text{Core Working Capital} = Inventory + \text{Trade Receivables} - \text{Trade Payables}
Variables

Core Working Capital: Excludes cash and non-operating/financing short-term items to assess true operational funding needs.

Exam note

Negative working capital in FMCG/Telecom reflects supplier-funded operations and customer advances.

Worked examples
Return on Equity (ROE) and ROCE (Pre- & Post-Tax)

Continuing from Problem 13: Bharat Consumer Ltd has Opening Net Worth of Rs 4,000 Cr and Closing Net Worth of Rs 4,400 Cr. Total Debt is Rs 1,200 Cr (constant). Total Assets are Rs 6,500 Cr. Calculate ROE, Pre-Tax ROCE, and Post-Tax ROCE.

Solvency & Coverage Ratios

Delta Infra Ltd has Total Debt of Rs 3,600 Cr, Net Worth of Rs 2,400 Cr, EBIT of Rs 480 Cr, and Annual Finance Interest Cost of Rs 320 Cr. Calculate the Debt-to-Equity (D/E) Ratio and Interest Coverage Ratio. Evaluate financial risk.

3-Factor DuPont Analysis Diagnostic Comparison

Analyze two retail firms: Alpha Mart (Net Profit Margin 4%, Asset Turnover 3.0x, Equity Multiplier 2.5x) and Beta Luxury (Net Profit Margin 16%, Asset Turnover 0.8x, Equity Multiplier 1.25x). Calculate ROE for both and identify their business drivers.