--- name: financial-analysis-agent description: 'Financial analysis skill for AI agents. Covers variance analysis, cash flow forecasting, month-end close automation, CFO commentary generation, 13-week cash flow dashboards, budget vs actual analysis, and financial statement review. Built by accounting professionals for agents that need to produce defensible financial outputs. Do NOT use for tax preparation, audit opinions, or regulatory filings — those require specialized compliance skills.' license: MIT metadata: openclaw: emoji: '💰' --- # Financial Analysis Agent A comprehensive financial analysis skill that enables AI agents to produce defensible, CFO-ready financial outputs. Every technique here is grounded in standard accounting practice (US GAAP / IFRS compatible) and designed for agents operating on real financial data. ## When to Use - Monthly/quarterly financial close cycles - Variance analysis on budget vs actual results - Cash flow forecasting and 13-week rolling dashboards - Generating CFO commentary and board-ready narratives - Ratio analysis for lending covenants or investor reporting - AR/AP aging analysis and collections prioritization - Bank reconciliation pattern matching ## When NOT to Use - Tax return preparation or tax advisory (use a tax compliance skill) - Audit opinions or attestation work (requires human CPA sign-off) - Regulatory filings (SEC, state filings — requires compliance review) - Valuation work (DCF, comps — requires a valuation-specific skill) - Payroll processing or HR-related financial work --- ## 1. Variance Analysis Methodology Variance analysis decomposes the difference between budget and actual into **price**, **volume**, and **mix** components. ### Price Variance Measures the impact of actual price differing from budgeted price, holding volume constant. ``` Price Variance = (Actual Price - Budget Price) × Actual Volume ``` **Example:** ``` Budget: 1,000 units @ $50 = $50,000 Actual: 1,000 units @ $53 = $53,000 Price Variance = ($53 - $50) × 1,000 = $3,000 Unfavorable (cost) or Favorable (revenue) ``` ### Volume Variance Measures the impact of actual volume differing from budgeted volume, at budgeted price. ``` Volume Variance = (Actual Volume - Budget Volume) × Budget Price ``` **Example:** ``` Budget: 1,000 units @ $50 = $50,000 Actual: 1,100 units @ $50 = $55,000 Volume Variance = (1,100 - 1,000) × $50 = $5,000 Favorable (revenue) ``` ### Mix Variance When multiple products exist, mix variance isolates the impact of selling a different proportion than planned. ``` Mix Variance = (Actual Mix% - Budget Mix%) × Actual Total Volume × Budget Margin ``` ### Three-Way Reconciliation Always reconcile: `Total Variance = Price Variance + Volume Variance + Mix Variance` If the three don't sum to the total, you have a calculation error. Never present unreconciled variances. ### Materiality Thresholds | Metric | Threshold | Action | |--------|-----------|--------| | Revenue line item | >5% or >$10K | Requires written explanation | | Expense line item | >10% or >$5K | Requires written explanation | | Net income impact | >2% | Requires CFO commentary | | Balance sheet item | >$25K | Requires reconciliation | Adjust thresholds based on entity size. A $2M company uses different thresholds than a $200M company. --- ## 2. Cash Flow Forecasting (13-Week Rolling) The 13-week cash flow forecast is the standard tool for liquidity management. It covers one full quarter on a weekly basis. ### Structure ``` Week → W1 W2 W3 W4 ... W13 Total ───────────────────────────────────────────────────────────────── Opening Cash 100K 112K 108K 95K XXK 100K INFLOWS Collections 50K 45K 55K 40K XXK XXX Other Income 2K 1K 3K 2K XXK XXX Total Inflows 52K 46K 58K 42K XXK XXX OUTFLOWS Payroll (20K) — (20K) — XXK XXX Rent (5K) — — — XXK XXX Vendors (10K) (12K) (8K) (15K) XXK XXX Debt Service — (5K) — — XXK XXX Other (5K) (3K) (3K) (4K) XXK XXX Total Outflows (40K) (20K) (31K) (19K) XXK XXX Net Cash Flow 12K (4K) (13K) 23K XXK XXX Closing Cash 112K 108K 95K 118K XXK XXX Min Balance Req 50K 50K 50K 50K 50K 50K Surplus/(Deficit)62K 58K 45K 68K XXK XXX ``` ### Collection Assumptions Build collection curves from historical data: ``` Invoice Terms Collection Pattern ───────────────────────────────────── Net 30 Month 1: 15%, Month 2: 70%, Month 3: 12%, Bad debt: 3% Net 15 Month 1: 80%, Month 2: 17%, Bad debt: 3% COD Month 1: 97%, Bad debt: 3% ``` ### Forecast Accuracy Tracking Every week, compare last week's forecast to actual: ``` Forecast Accuracy = 1 - |Actual - Forecast| / |Forecast| Target: >90% accuracy on 1-week forecast, >80% on 4-week ``` ### Red Flags - Closing cash below minimum balance requirement in any week - Three consecutive weeks of declining cash - Collections falling below 85% of forecast - Concentration: any single customer >25% of weekly inflows --- ## 3. Month-End Close Checklist A disciplined 10-step close process. Target: complete within 5 business days of month-end. ### The 10 Steps ``` Step Task Owner Day Verification ───────────────────────────────────────────────────────────────────── 1 Cut off AR/AP AR/AP D+1 Last invoice # matches 2 Bank reconciliation Cash D+1 All items <30 days 3 Record accruals GL D+2 Accrual schedule signed 4 Record depreciation/amortization GL D+2 Fixed asset register ties 5 Intercompany eliminations GL D+3 IC balances net to zero 6 Revenue recognition review Rev D+3 ASC 606 checklist complete 7 Inventory/COGS reconciliation Ops D+3 Physical vs book <2% 8 Prepare trial balance GL D+4 Debits = Credits 9 Variance analysis FP&A D+4 All material items explained 10 Management review & sign-off CFO D+5 Signed close package ``` ### Accrual Checklist Common accruals that get missed: - [ ] Payroll accrual (days worked but not yet paid) - [ ] Bonus accrual (pro-rata for period) - [ ] Interest accrual on debt - [ ] Utility accruals - [ ] Professional services received but not invoiced - [ ] Insurance amortization - [ ] Prepaid expense amortization - [ ] Deferred revenue recognition ### Journal Entry Standards Every journal entry must include: 1. Date 2. Debit account(s) with amount 3. Credit account(s) with amount 4. Description/memo explaining the entry 5. Supporting documentation reference 6. Preparer and approver ``` Example: Date: 2026-02-28 DR 6100 - Professional Services $15,000 CR 2100 - Accrued Expenses $15,000 Memo: Accrue Feb legal fees per engagement letter #2026-041 Support: Email from counsel confirming Feb activity Prepared: Agent | Approved: [CFO Name] ``` --- ## 4. CFO Commentary Templates CFO commentary answers three questions: **What changed? Why? What should we do?** ### Revenue Commentary Template ```markdown ## Revenue: $X.XM vs Budget $X.XM (↑/↓ X.X%) **What changed:** - [Product/Service line] revenue was $XXK [above/below] budget - [Volume/Price/Mix] was the primary driver **Why:** - [Root cause — be specific: lost customer, delayed deal, new contract, seasonal] - [Secondary cause if applicable] **What to do:** - [Action item 1 with owner and deadline] - [Action item 2 with owner and deadline] **Outlook:** - [Forward-looking statement for next period] - [Risk/opportunity to flag] ``` ### Expense Commentary Template ```markdown ## Operating Expenses: $X.XM vs Budget $X.XM (↑/↓ X.X%) **What changed:** - [Expense category] was $XXK [over/under] budget - [One-time vs recurring classification] **Why:** - [Root cause — hiring timing, vendor price increase, project delay, etc.] **What to do:** - [If over: mitigation plan or approval to exceed] - [If under: whether savings are permanent or timing] ``` ### Cash Position Commentary ```markdown ## Cash Position: $X.XM (↑/↓ $XXK from prior month) **Key movements:** - Operating cash flow: $XXK [positive/negative] - Collections: $XXK received vs $XXK billed (XX% collection rate) - Major payments: [List any >$25K individual payments] **Liquidity outlook:** - Runway: XX months at current burn rate - Covenants: [In compliance / approaching threshold] - Next major cash event: [Date and description] ``` --- ## 5. Budget vs Actual Analysis ### Report Structure ``` Actual Budget Var $ Var % Prior Yr YoY % ───────────────────────────────────────────────────────────────────────────────── Revenue Product A 450K 500K (50K) -10.0% 380K +18.4% Product B 320K 300K 20K +6.7% 290K +10.3% Services 180K 200K (20K) -10.0% 150K +20.0% Total Revenue 950K 1,000K (50K) -5.0% 820K +15.9% COGS (380K) (400K) 20K -5.0% (340K) +11.8% Gross Profit 570K 600K (30K) -5.0% 480K +18.8% Gross Margin 60.0% 60.0% — — 58.5% +1.5pp Operating Expenses Salaries (250K) (240K) (10K) +4.2% (200K) +25.0% Marketing (60K) (80K) 20K -25.0% (50K) +20.0% G&A (45K) (50K) 5K -10.0% (40K) +12.5% Total OpEx (355K) (370K) 15K -4.1% (290K) +22.4% EBITDA 215K 230K (15K) -6.5% 190K +13.2% EBITDA Margin 22.6% 23.0% -0.4pp — 23.2% -0.6pp ``` ### Waterfall Analysis For board presentations, decompose the variance into a waterfall: ``` Budget EBITDA $230K Revenue shortfall (50K) ← Volume: (30K), Price: (15K), Mix: (5K) COGS favorability 20K ← Material costs lower than expected Salary overage (10K) ← Hired 2 weeks earlier than planned Marketing savings 20K ← Campaign delayed to next month G&A savings 5K ← Office lease negotiation Actual EBITDA $215K ``` --- ## 6. Ratio Analysis ### Liquidity Ratios | Ratio | Formula | Healthy Range | Red Flag | |-------|---------|---------------|----------| | Current Ratio | Current Assets / Current Liabilities | 1.5 - 3.0 | < 1.0 | | Quick Ratio | (Cash + Receivables) / Current Liabilities | 1.0 - 2.0 | < 0.5 | | Cash Ratio | Cash / Current Liabilities | 0.5 - 1.0 | < 0.2 | | Working Capital | Current Assets - Current Liabilities | Positive | Negative trend | ### Profitability Ratios | Ratio | Formula | Notes | |-------|---------|-------| | Gross Margin | Gross Profit / Revenue | Compare to industry benchmarks | | Operating Margin | Operating Income / Revenue | Exclude one-time items | | Net Margin | Net Income / Revenue | After all charges | | EBITDA Margin | EBITDA / Revenue | Most comparable across companies | | ROE | Net Income / Avg Equity | Should exceed cost of equity | | ROA | Net Income / Avg Assets | Asset efficiency measure | ### Leverage Ratios | Ratio | Formula | Covenant Typical | Warning | |-------|---------|-------------------|---------| | Debt/Equity | Total Debt / Total Equity | < 2.0x | > 3.0x | | Debt/EBITDA | Total Debt / EBITDA | < 3.0x | > 4.0x | | Interest Coverage | EBITDA / Interest Expense | > 3.0x | < 2.0x | | Fixed Charge Coverage | (EBITDA - CapEx) / (Interest + Principal) | > 1.2x | < 1.0x | ### Efficiency Ratios | Ratio | Formula | Target | |-------|---------|--------| | DSO (Days Sales Outstanding) | (AR / Revenue) × Days | < Payment terms | | DPO (Days Payable Outstanding) | (AP / COGS) × Days | Match or exceed DSO | | DIO (Days Inventory Outstanding) | (Inventory / COGS) × Days | Industry-specific | | Cash Conversion Cycle | DSO + DIO - DPO | Lower is better | --- ## 7. Aging Analysis ### Accounts Receivable Aging ``` Customer Current 1-30 31-60 61-90 90+ Total % of AR ────────────────────────────────────────────────────────────────────────────── Acme Corp 25,000 10,000 5,000 — — 40,000 26.7% Beta LLC 15,000 8,000 — 3,000 — 26,000 17.3% Gamma Inc 20,000 — — — 12,000 32,000 21.3% All Others 30,000 15,000 5,000 2,000 — 52,000 34.7% ────────────────────────────────────────────────────────────────────────────── Total 90,000 33,000 10,000 5,000 12,000 150,000 100% % of Total 60.0% 22.0% 6.7% 3.3% 8.0% 100% Reserve Rate 0% 0% 5% 25% 50% Reserve Amount — — 500 1,250 6,000 7,750 ``` ### Collection Priority Matrix | Bucket | Action | Frequency | Escalation | |--------|--------|-----------|------------| | Current | Thank-you / relationship | Monthly | None | | 1-30 past due | Friendly reminder email | Weekly | None | | 31-60 past due | Phone call + formal letter | 2x/week | AR Manager | | 61-90 past due | Demand letter + payment plan | Daily | Controller | | 90+ past due | Legal review + reserve | Daily | CFO | ### Accounts Payable Aging Mirror the AR structure but optimize for: - Early payment discounts (2/10 Net 30 = 36.7% annualized return) - Cash flow timing (pay on last day of terms, not before) - Vendor relationship management (strategic vendors get priority) --- ## 8. Bank Reconciliation Patterns ### Standard Reconciliation Format ``` Bank Balance per Statement (2/28/2026) $125,432.18 ADD: Deposits in Transit 2/27 - Customer payment #4521 8,500.00 2/28 - Wire transfer (pending) 15,000.00 23,500.00 LESS: Outstanding Checks Check #3041 (1/15) - Vendor payment (2,300.00) Check #3055 (2/20) - Rent (5,000.00) Check #3058 (2/25) - Supplies (450.00) (7,750.00) LESS: Bank Errors (None this period) 0.00 Adjusted Bank Balance $141,182.18 Book Balance per GL (2/28/2026) $141,682.18 LESS: Bank Charges Monthly service fee (35.00) Wire fee (25.00) ADD: Interest Earned February interest 12.00 LESS: NSF Checks Customer ABC - returned check (452.00) Adjusted Book Balance $141,182.18 DIFFERENCE $0.00 ✓ RECONCILED ``` ### Stale Items Investigation Any reconciling item older than 30 days requires investigation: | Age | Item Type | Action | |-----|-----------|--------| | 30-60 days | Outstanding check | Contact payee, confirm receipt | | 60-90 days | Outstanding check | Void and reissue if needed | | 90+ days | Outstanding check | Void, reverse entry, escheatment review | | 30+ days | Deposit in transit | Investigate with bank, possible misposting | --- ## 9. Financial Statement Review Checklist Before releasing any financial statement, verify: ### Balance Sheet - [ ] Assets = Liabilities + Equity (must balance to the penny) - [ ] Cash ties to bank reconciliation - [ ] AR ties to aging report and subledger - [ ] AP ties to aging report and subledger - [ ] Fixed assets tie to depreciation schedule - [ ] Debt balances tie to loan statements - [ ] Retained earnings = Prior RE + Net Income - Dividends - [ ] Intercompany balances eliminate to zero ### Income Statement - [ ] Revenue recognized per ASC 606 / IFRS 15 criteria - [ ] COGS matches inventory movement - [ ] Depreciation/amortization matches fixed asset schedule - [ ] Interest expense matches debt schedule - [ ] Tax provision is reasonable (effective rate within expected range) - [ ] No below-the-line items without disclosure - [ ] Period-over-period comparison is sensible (no sign errors) ### Cash Flow Statement - [ ] Operating + Investing + Financing = Change in Cash - [ ] Change in cash ties to balance sheet cash movement - [ ] Non-cash items properly excluded from operating section - [ ] CapEx in investing ties to fixed asset additions - [ ] Debt proceeds/payments tie to balance sheet debt movement - [ ] Supplemental disclosures (interest paid, taxes paid) are accurate ### Analytical Review - [ ] Gross margin is within 2pp of prior period (or explained) - [ ] Revenue growth is consistent with known business activity - [ ] No expense line items with >25% unexplained variance - [ ] Ratios (current, quick, leverage) are within covenant requirements - [ ] Month-over-month trends are logical - [ ] YTD figures match sum of monthly figures

Financial Analysis Agent

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