Module 04 · Exercises

Use the Kaveri and Nirmal pages; compute with Python (tools/fi/ratios.py where useful) before checking the solutions.

Warm-up

E04.01 Compute Kaveri's revenue CAGR for FY21–FY26 and FY23–FY26, and explain why the two differ.

E04.02 Define gross, EBITDA, EBIT and PAT margin and state what a move in each (with the others stable) tells you.

E04.03 Define ROE, ROCE and ROIC with numerators and denominators as the course uses them, and say which is pre-tax.

E04.04 Define DIO, DSO, DPO and the cash conversion cycle, stating the base (revenue or COGS) for each.

E04.05 Define net debt, net debt/EBITDA, interest cover and DSCR.

E04.06 Define basic EPS, diluted EPS, BVPS, payout ratio and FCF yield.

E04.07 What is the accruals ratio and why does a high value predict lower future returns?

Core (Kaveri unless stated)

E04.08 Decompose FY23–FY26 revenue growth by segment (agri 550.6 → 606.2; industrial 262.2 → 355.9; solar 61.2 → 355.9): compute each segment's CAGR and its share of the total increase. What does this say about the "14.7% CAGR"?

E04.09 Build the FY26 common-size P&L (materials, employees, other expenses, D&A, finance costs as % of revenue) and compare with FY24. Which line explains most of the EBITDA-margin decline?

E04.10 Using the fixed/variable split from 04.2 (contribution ₹348.8 Cr, fixed costs ₹214.7 Cr, EBIT ₹134.1 Cr), compute the degree of operating leverage and the EBIT if revenue falls 10% with an unchanged contribution margin.

E04.11 Run a margin bridge for FY24 → FY26 with segment gross margins of agri 40%, industrial 36%, solar 22% (FY24) and 40%, 36%, 24% (FY26), and revenue shares 57/29/14 and 46/27/27. Separate the mix and rate effects.

E04.12 Compute FY26 ROE (avg equity 671.7), ROCE (EBIT + other income 138.0; avg capital employed 868.1) and ROIC (NOPAT at 25.17%; avg invested capital 836.8). Reconcile ROCE and ROIC.

E04.13 Run the 3-step DuPont for FY26 (net margin, asset turnover on avg assets 1,089.7, leverage on avg equity 671.7) and the 5-step version (tax burden, interest burden using EBIT incl. other income). Which factor drove the ROE change from FY24 (16.5%)?

E04.14 Compute incremental ROIC for FY24 → FY26 (NOPAT 91.4 → 100.3; invested capital 690.6 → 886.8) and compare with the average ROIC. Interpret.

E04.15 Compute the FY26 reinvestment rate (capex 52.0 incl. intangibles; ΔNWC 89.7; D&A 47.8; NOPAT 100.3) and the growth it supports at a 12% ROIC. Compare with actual revenue growth.

E04.16 Compute FY26 inventory days (on materials 858.0), receivable days (on revenue), payable days (on materials) and the cash conversion cycle; then NWC (inventory + receivables + OCA − payables − OCL) as % of revenue.

E04.17 If receivable days were 80 instead of 96 at FY26 year-end, how much cash would have been released? What would CFO and FCF have been?

E04.18 Compute FY26 CFO/EBITDA, CFO/PAT, FCF (CFO − capex on PP&E and intangibles) and the three-year (FY24–26) versions.

E04.19 Estimate FY26 maintenance capex using the D&A proxy and state growth capex; discuss whether the proxy is reasonable for a company that just built a plant.

E04.20 Compute FY26 net debt (ex-leases and incl. leases), net debt/EBITDA, debt/equity, interest cover (EBIT/finance costs) and DSCR ((EBITDA − current tax)/(interest + ₹20 Cr scheduled term-loan repayment)).

E04.21 Stress: revenue −15%, EBITDA margin 10%, working-capital debt +₹60 Cr, interest scaled with debt. Compute interest cover and net debt/EBITDA (use the method in 04.5 §3.1).

E04.22 List every off-balance-sheet or contingent item in Kaveri's notes with its amount and how you would treat it in adjusted net debt.

E04.23 Compute FY26 basic and diluted EPS, BVPS, DPS paid, payout ratio (on FY26 PAT), and at ₹390: P/E, P/B, EV/EBITDA (EV incl. leases) and FCF yield.

E04.24 Compute the FY26 cash-flow accruals ratio ((PAT − CFO)/avg assets) and score Kaveri on the ten-item quality scorecard of 04.7 §5, justifying each score in one line.

E04.25 Nirmal Finance. Build the FY26 RoA tree (% of average assets 6,831.4) and convert to RoE via leverage. Then compute RoE if credit cost rose to 4.0% of average loans (6,350) with everything else unchanged.

E04.26 Peer comparison (fictional peer set on the Kaveri page). Compute each peer's PAT margin and rank the five companies on ROCE, margin, growth and leverage. Where does Kaveri sit, and does its P/E discount look justified?

Stretch

E04.27 A company reports ROCE of 22% on closing capital employed with 30% growth in capital during the year. Recompute an approximate ROCE on average capital and explain the bias.

E04.28 Two companies have ROE of 18%: A with D/E 0.1 and B with D/E 2.0. Estimate each one's ROA (after-tax cost of debt 6%) and describe what happens to each ROE if ROA falls 4 pp.

E04.29 Kaveri's asset turnover has been flat at ~1.2 since FY22 while ROE rose then fell. Using the DuPont decomposition, write three sentences for a memo on what this implies for where research time should go.

E04.30 Construct a fictional company whose EBITDA margin rises every year while FCF falls every year, and explain the mechanism in the statements.

Real-world task

E04.31 Using tools/fi/data.py (fetch_statements) or a Screener export, build a five-year ratio dashboard (growth, margins, ROE/ROCE/ROIC, days, CCC, CFO/EBITDA, FCF, net debt/EBITDA, interest cover) for a listed Indian manufacturer. Write ten lines reading the dashboard top to bottom as a story.

E04.32 For the same company, compute the quality-of-earnings scorecard and the three-year incremental ROIC; state the single most important question the numbers raise for the concall.