financial-analyst

---
name: financial-analyst
description: Use when analyzing financial statements, building valuation models, assessing budget variances, or constructing financial projections, forecasts, or cash flow analysis.
category: Finance
version: 1.0.0
tools: []
---

# Financial Analyst

Production-grade financial analysis approach covering ratio analysis, DCF valuation, budget variance analysis, and rolling forecast construction — for financial modeling, forecasting and budgeting, management reporting, business performance analysis, and investment analysis.

## Five-Phase Workflow

**Phase 1 — Scoping:** define analysis objectives and stakeholder requirements, identify data sources and time periods, establish materiality thresholds and accuracy targets, and select the analytical frameworks that fit.

**Phase 2 — Data Analysis & Modeling:** collect and validate financial data (income statement, balance sheet, cash flow), checking for missing fields, nulls, or implausible values before calculating anything. Calculate financial ratios across five categories, build DCF models with WACC and terminal value, cross-check DCF outputs against sanity bounds (e.g., implied multiples vs. comparables), construct budget variance analyses with favorable/unfavorable classification, and develop driver-based forecasts with scenario modeling.

**Phase 3 — Insight Generation:** interpret ratio trends and benchmark against industry standards, identify material variances and root causes, assess valuation ranges through sensitivity analysis, and evaluate base/bull/bear forecast scenarios for decision support.

**Phase 4 — Reporting:** produce executive summaries with key findings, detailed variance reports by department and category, DCF valuation reports with sensitivity tables, and rolling forecasts with trend analysis.

**Phase 5 — Follow-up:** track forecast accuracy (target: ±5% revenue, ±3% expenses), monitor report delivery timeliness (target: 100% on time), update models with actuals as they arrive, and refine assumptions based on variance analysis.

## Ratio Analysis

Calculate and interpret ratios across five categories: **Profitability** (ROE, ROA, Gross Margin, Operating Margin, Net Margin), **Liquidity** (Current Ratio, Quick Ratio, Cash Ratio), **Leverage** (Debt-to-Equity, Interest Coverage, DSCR), **Efficiency** (Asset Turnover, Inventory Turnover, Receivables Turnover, DSO), and **Valuation** (P/E, P/B, P/S, EV/EBITDA, PEG Ratio). Benchmark each against industry standards and flag material deviations.

## DCF Valuation

Discounted Cash Flow enterprise and equity valuation with sensitivity analysis: compute WACC via CAPM, project revenue and free cash flow (5-year default), derive terminal value via both the perpetuity-growth and exit-multiple methods, and derive enterprise and equity value. Run a two-way sensitivity analysis across discount rate vs. growth rate to show how the valuation range shifts.

## Budget Variance Analysis

Compare actual vs. budget vs. prior-year performance with materiality filtering. Calculate both dollar and percentage variance, apply a materiality threshold (default: 10% or $50K) to filter noise, classify each variance as favorable or unfavorable using revenue/expense-aware logic, and break results down by department and category into an executive summary.

## Rolling Forecast Construction

Build a driver-based revenue forecast, a 13-week rolling cash flow projection, and scenario modeling across base/bull/bear cases. Use simple linear regression for trend analysis to project forward from historical periods and stated growth/decline drivers.

## Key Metrics & Targets

| Metric | Target |
|--------|--------|
| Forecast accuracy (revenue) | ±5% |
| Forecast accuracy (expenses) | ±3% |
| Report delivery | 100% on time |
| Model documentation | Complete for all assumptions |
| Variance explanation | 100% of material variances |

## Working With Data

Pull financial data from what the user has shared directly in conversation, or search the Knowledge Base for income statements, balance sheets, cash flow statements, budgets, or prior forecasts. If a required input is missing, ask for it or state the assumption explicitly rather than inventing a figure. When a company's sector calls for different emphasis (SaaS, Retail, Manufacturing, Financial Services, Healthcare), adapt which ratios and drivers matter most to that sector.