Financial Analysis AI Prompts

Analyze the cash flow quality and sustainability of this business. Cash flow statement: {{cash_flow_data}} Periods: {{periods}} 1. Cash flow waterfall: EBITDA - Interest paid - Taxes paid - Capex - Change in working capital = Free Cash Flow (FCF) FCF to equity = FCF - Debt repayments + New borrowings Show the waterfall for each period. 2. Cash conversion quality: - FCF conversion: FCF / Net Income (target > 80% for high-quality earnings) - If FCF < Net Income: accrual accounting is inflating net income (working capital build, non-cash charges) - EBITDA to cash conversion: FCF / EBITDA - Recurring FCF: strip out one-time items and non-recurring capex 3. Capex analysis: - Maintenance capex vs growth capex: what portion is necessary to maintain the asset base? - Capex / Revenue %: trending up or down? - Capex / Depreciation: ratio < 1 may indicate underinvestment 4. Working capital cash consumption: - Is working capital consuming cash as the business grows? - For each $1 of revenue growth: how many cents of working capital investment are required? 5. Liquidity and sustainability: - Cash runway: current cash / monthly net cash burn - Debt service coverage: FCF / (Interest + Required debt amortization) - At current FCF: how many years to pay off net debt? 6. Red flags in cash flow: - Growing receivables outpacing revenue (customers paying slower or revenue recognition issues) - Capex consistently below depreciation (asset base deteriorating) - Significant gap between net income and OCF (earnings quality concern) - Negative FCF with no clear path to positive (sustainability concern) Return: cash flow waterfall table, conversion metrics, capex analysis, working capital cash impact, liquidity assessment, and red flag identification.

Conduct a comprehensive financial ratio analysis for {{company}}. Financial statements: {{financial_statements}} Peer benchmarks: {{benchmarks}} Periods: {{periods}} 1. Profitability ratios: - Gross margin: Gross Profit / Revenue - EBITDA margin: EBITDA / Revenue - Operating margin: EBIT / Revenue - Net margin: Net Income / Revenue - Return on equity (ROE): Net Income / Average Equity - Return on assets (ROA): Net Income / Average Total Assets - Return on invested capital (ROIC): NOPAT / (Equity + Net Debt) 2. Liquidity ratios: - Current ratio: Current Assets / Current Liabilities (target > 1.5) - Quick ratio: (Cash + Receivables) / Current Liabilities (target > 1.0) - Cash ratio: Cash / Current Liabilities 3. Leverage ratios: - Net debt / EBITDA (target < 3x for investment grade) - Interest coverage: EBITDA / Interest Expense (target > 3x) - Debt / Equity ratio - Debt / Total Capital 4. Efficiency ratios: - Days Sales Outstanding (DSO): Receivables / (Revenue / 365) - Days Inventory Outstanding (DIO): Inventory / (COGS / 365) - Days Payable Outstanding (DPO): Payables / (COGS / 365) - Cash Conversion Cycle: DSO + DIO - DPO 5. Per ratio: provide: - Value for each historical period - Trend: improving or deteriorating? - Peer median comparison: above or below benchmark? - Commentary: what is driving the trend? 6. DuPont decomposition of ROE: ROE = Net Margin x Asset Turnover x Financial Leverage Which component is driving ROE? Is the source of returns healthy (operating efficiency) or concerning (excessive leverage)? Return: ratio table across periods, peer benchmark comparison, trend assessment, DuPont decomposition, and key findings.

Analyze the unit economics of this business and assess its scalability. Business model: {{business_model}} Data: {{unit_economics_data}} 1. Customer Acquisition Cost (CAC): CAC = Total Sales and Marketing Spend / New Customers Acquired - Blended CAC: all channels combined - By-channel CAC: paid acquisition, organic, referral, outbound - CAC payback period: CAC / Monthly Gross Profit per Customer Target: < 12 months for SaaS, < 6 months for e-commerce 2. Customer Lifetime Value (LTV): LTV = Average Revenue per Customer / Churn Rate (for SaaS) Or: LTV = Average Order Value x Purchase Frequency x Gross Margin / Churn Rate - Gross margin LTV: multiply by gross margin to get profit-basis LTV - LTV should account for the expected customer tenure, not assume infinite life 3. LTV / CAC ratio: - LTV / CAC > 3: business is generating healthy returns on acquisition spend - LTV / CAC < 1: acquiring customers at a loss (sustainable only during investment phase) - Trend: is LTV/CAC improving or deteriorating as the business scales? 4. Cohort economics: - By acquisition cohort: cumulative gross profit per customer over time - CAC recovery curve: at what month does the cohort recover its acquisition cost? - Cohort comparison: are newer cohorts recovering CAC faster or slower? 5. Contribution margin per unit/customer: Revenue - Variable COGS - Variable Sales and Marketing = Contribution Margin - At what volume does the business reach contribution margin breakeven per unit? 6. Scalability assessment: - Does CAC increase as the business scales? (Channel saturation) - Does LTV increase as the business scales? (Network effects, pricing power) - What is the implied steady-state margin when the business reaches maturity? Return: CAC and LTV calculations, LTV/CAC ratio, cohort recovery curves, contribution margin analysis, and scalability assessment.

Analyze the working capital dynamics and cash conversion efficiency of this business. Balance sheet and P&L data: {{financial_data}} Periods: {{periods}} Industry: {{industry}} 1. Working capital components: Net Working Capital = Current Operating Assets - Current Operating Liabilities - Operating current assets: Accounts Receivable + Inventory + Prepaid Expenses - Operating current liabilities: Accounts Payable + Accrued Expenses + Deferred Revenue - Exclude: cash and short-term investments (financing items) 2. Days metrics (DSO, DIO, DPO): - DSO = AR / (Revenue / 365): how quickly do customers pay? - DIO = Inventory / (COGS / 365): how long does inventory sit? - DPO = AP / (COGS / 365): how long before we pay suppliers? - CCC = DSO + DIO - DPO: net days of cash tied up in operations A negative CCC (e.g. Amazon, Costco) means the business is funded by its customers. 3. Trend analysis: - Plot DSO, DIO, DPO, and CCC over {{periods}} - Is the CCC improving (shortening) or worsening (lengthening)? - Are individual components driving the change? 4. Cash impact of working capital changes: - Change in NWC = NWC(end) - NWC(beginning) - Positive change = use of cash, negative change = source of cash - If revenue is growing fast: working capital will likely consume cash even if days metrics are stable 5. Industry benchmark comparison: - DSO, DIO, DPO vs industry median - Which components are out of line? (High DSO suggests collection problems; low DPO may mean supplier leverage is low) 6. Optimization opportunities: - DSO reduction: invoicing process, early payment discounts, collections follow-up - DIO reduction: inventory management, just-in-time ordering - DPO extension: negotiate longer payment terms with suppliers - For each lever: estimate the one-time cash release from a 5-day improvement Return: working capital table across periods, CCC calculation, benchmark comparison, cash impact analysis, and optimization opportunities with cash value estimates.