Financial Statements

What This Skill Does

• This skill generates financial statements with period-over-period comparison and variance analysis.
• It assists finance professionals in creating income statements, balance sheets, and cash flow statements.
• It is designed to streamline financial reporting and analysis.

When to Use

• Generating monthly income statements.
• Creating quarterly financial reports.
• Preparing annual financial statements.
• Analyzing year-to-date performance.
• Comparing current and prior periods.
• Identifying variances in financial data.

Key Features

• Generates income statements in standard multi-column format.
• Provides period-over-period comparison.
• Offers variance analysis.
• Supports monthly, quarterly, annual, and YTD reporting.
• Pulls data from connected ERP or data warehouse.
• Includes GAAP presentation requirements.

/financial-statements

If you see unfamiliar placeholders or need to check which tools are connected, see CONNECTORS.md.

Important: This command assists with financial statement workflows but does not provide financial advice. All statements should be reviewed by qualified financial professionals before use in reporting or filings.

Generate financial statements with period-over-period comparison and variance analysis. The workflow below walks through income statement generation; balance sheet and cash flow statement reference formats, GAAP presentation requirements (ASC 220/210/230), and common period-end adjustments are included as supporting reference material.

Usage

/financial-statements <period-type> <period>

Arguments

period-type — The reporting period type:

• monthly — Single month P&L with prior month and prior year month comparison
• quarterly — Quarter P&L with prior quarter and prior year quarter comparison
• annual — Full year P&L with prior year comparison
• ytd — Year-to-date P&L with prior year YTD comparison period — The period to report (e.g., 2024-12, 2024-Q4, 2024)

Workflow

1. Gather Financial Data

If ~~erp or ~~data warehouse is connected: Pull trial balance or income statement data for the specified period Pull comparison period data (prior period, prior year, budget/forecast) Pull account hierarchy and groupings for presentation

If no data source is connected:

Connect ~~erp or ~~data warehouse to pull financial data automatically. You can also paste trial balance data, upload a spreadsheet, or provide income statement data for analysis.

Prompt the user to provide: Current period revenue and expense data (by account or category) Comparison period data (prior period, prior year, and/or budget) Any known adjustments or reclassifications

2. Generate Income Statement

Present in standard multi-column format:

INCOME STATEMENT Period: [Period description] (in thousands, unless otherwise noted)

                          Current    Prior      Variance   Variance   Budget    Budget
                          Period     Period     ($)        (%)        Amount    Var ($)
                          --------   --------   --------   --------   --------  --------

REVENUE

• Product revenue $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX.
• Service revenue $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX.
• Other revenue $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX. -------- -------- -------- -------- --------
• TOTAL REVENUE $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX.

COST OF REVENUE

• [Cost items] $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX. -------- -------- -------- -------- --------
• GROSS PROFIT $XX,XXX $XX,XXX $X,XXX X.
• X% $XX,XXX $X,XXX.
• Gross Margin XX.
• X% XX.
• X%.

OPERATING EXPENSES

• Research & development $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX.

• Sales & marketing $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX.

• General & administrative $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX. -------- -------- -------- -------- --------

• TOTAL OPERATING EXPENSES $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX.

• OPERATING INCOME (LOSS) $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX.

• Operating Margin XX.

• X% XX.

• X%.

OTHER INCOME (EXPENSE)

• Interest income $XX,XXX $XX,XXX $X,XXX X.

• X%.

• Interest expense ($XX,XXX) ($XX,XXX) $X,XXX X.

• X%.

• Other, net $XX,XXX $XX,XXX $X,XXX X.

• X%. -------- -------- --------

• TOTAL OTHER INCOME (EXPENSE) $XX,XXX $XX,XXX $X,XXX X.

• X%.

• INCOME BEFORE TAXES $XX,XXX $XX,XXX $X,XXX X.

• X%.

• Income tax expense $XX,XXX $XX,XXX $X,XXX X.

• X%. -------- -------- --------

• NET INCOME (LOSS) $XX,XXX $XX,XXX $X,XXX X.

• X% $XX,XXX $X,XXX.

• Net Margin XX.

• X% XX.

• X%.

3. Variance Analysis

For each line item, calculate and flag material variances.

Variance Calculation

For each line item, calculate: Dollar variance: Current period - Prior period (or current period - budget) Percentage variance: (Current - Prior) / |Prior| x 100 Basis point change: For margins and ratios, express change in basis points (1 bp = 0.01%)

Materiality Thresholds

Define what constitutes a "material" variance requiring investigation. Common approaches:

Fixed dollar threshold: Variances exceeding a set dollar amount (e.g., $50K, $100K) Percentage threshold: Variances exceeding a set percentage (e.g., 10%, 15%) Combined: Either the dollar OR percentage threshold is exceeded Scaled: Different thresholds for different line items based on their size and volatility

Example thresholds (adjust for your organization):

Variance Decomposition

Break down total variance into component drivers:

Volume/quantity effect: Change in volume at prior period rates Rate/price effect: Change in rate/price at current period volume Mix effect: Shift in composition between items with different rates/margins New/discontinued items: Items present in one period but not the other One-time/non-recurring items: Items that are not expected to repeat Timing effect: Items shifting between periods (not a true change in run rate) Currency effect: Impact of FX rate changes on translated results

Investigation and Narrative

For each material variance: Quantify the variance ($ and %) Identify whether favorable or unfavorable Decompose into drivers using the categories above Provide a narrative explanation of the business reason Assess whether the variance is temporary or represents a trend change Note any actions required (further investigation, forecast update, process change)

4. Key Metrics Summary

KEY METRICS Current Prior Change

• Revenue growth (%) X.
• X%.
• Gross margin (%) XX.
• X% XX.
• X% X.
• X pp.
• Operating margin (%) XX.
• X% XX.
• X% X.
• X pp.
• Net margin (%) XX.
• X% XX.
• X% X.
• X pp.
• OpEx as % of revenue XX.
• X% XX.
• X% X.
• X pp.
• Effective tax rate (%) XX.
• X% XX.
• X% X.
• X pp.

5. Material Variance Summary

List all material variances requiring investigation:

| Line Item | Variance ($) | Variance (%) | Di