Skill BreakdownRatio AnalysisNo AI Required
Analyzing Financial Statements: Execution-ready workflow
From data prep to ratio interpretation, trends, and benchmarks - all in one page.
This ratio-based workflow is not audit, investment, or accounting advice; consult professionals for complex cases.
Built on MIT-licensed Anthropic skill plus university and forum evidence.
Required Inputs
Have the core data ready.
Income statement, balance sheet, cash flow (2+ periods)
Currency + units (e.g., USD, thousands)
Industry or peer benchmarks (optional)
Share price + shares outstanding (valuation metrics)
Outputs
Report-ready deliverables.
Ratio matrix + key metrics table
Horizontal/vertical analysis with trends
Benchmark deltas and red-flag notes
Copy-ready summary + Excel output
Input Template
Copy this template to start.
Period: FY2023, FY2024 Currency: USD (thousands) Income Statement: - Revenue - COGS - Operating Income - Net Income Balance Sheet: - Total Assets - Total Liabilities - Equity - Current Assets - Current Liabilities Cash Flow: - Operating Cash Flow - Capex - Free Cash Flow Market Data (optional): - Share Price - Shares Outstanding
CSV/JSON/Excel are all supported as long as units are consistent.
Workflow
Five steps to finish
From data prep to conclusions, each step is explicit.
Prepare the three statements
Collect income statement, balance sheet, and cash flow.
Use at least two periods (YoY or QoQ). Note currency/units and add share data if needed.
Statements: Income, Balance Sheet, Cash Flow Periods: >= 2 (YoY or QoQ) Currency: USD (thousands) Market data: price, shares (optional)
Normalize & validate
Standardize line items and fix missing values.
Flag one-off items so ratios are not distorted.
Normalize line items -> map to standard labels Check missing values + units Flag one-off items for adjustment
Calculate core ratios
Compute profitability, liquidity, leverage, efficiency, valuation, per-share.
Deliver a complete ratio matrix for comparison.
Ratios = profitability + liquidity + leverage
+ efficiency + valuation + per-shareCompare & interpret
Run horizontal/vertical analysis and benchmark comparisons.
Highlight red flags and provide interpretation guidance.
Compare vs. industry benchmarks Run horizontal + vertical analysis Highlight red flags + trend shifts
Package the report
Deliver narrative summary and Excel-ready tables.
Include key takeaways, benchmark deltas, and risk notes.
Export ratio table + narrative summary Include benchmark deltas + red flags Deliver Excel-ready output
Data Integrity Checks
Validate before interpretation
Quick sanity checks grounded in the accounting equation.
| Check | Expected tie-out | Why |
|---|---|---|
| Accounting equation balance | Assets = Liabilities + Equity | Imbalances often signal missing items or inconsistent definitions. |
| Net income to retained earnings | Net income should flow into retained earnings/equity | Confirms income statement aligns with equity changes. |
| Revenue/expense impact on equity | Revenues increase equity; expenses reduce equity | Prevents conclusions that contradict equity movements. |
Ratio Matrix
Complete coverage
Ratio categories follow the skill definition.
| Category | Ratios | Why it matters |
|---|---|---|
| Profitability | ROE, ROA, Gross Margin, Operating Margin, Net Margin | Shows profit efficiency and margin structure. |
| Liquidity | Current Ratio, Quick Ratio, Cash Ratio | Short-term solvency and cash coverage. |
| Leverage | Debt-to-Equity, Interest Coverage, DSCR | Capital structure risk and debt service strength. |
| Efficiency | Asset Turnover, Inventory Turnover, Receivables Turnover | Asset utilization and operating turnover. |
| Valuation | P/E, P/B, P/S, EV/EBITDA, PEG | Market pricing vs earnings/assets. |
| Per-share | EPS, Book Value per Share, Dividend per Share | Investor-facing per-share comparables. |
Red-flag note
Never conclude from one ratio; combine trends and benchmarks.
Analysis Methods
Horizontal, vertical, benchmark, trend
Grounded in education sources and industry practice.
| Method | Focus | Value |
|---|---|---|
| Horizontal Analysis | Compare period-over-period changes (YoY/QoQ). | Spot trends and inflection points. |
| Vertical Analysis | Express line items as % of a base (revenue/assets). | Track structural shifts and cost mix. |
| Benchmarking | Compare to industry or peer averages. | Validate performance vs norms. |
| Trend Scan | Multi-period trend + anomaly flags. | Surface emerging risks and wins. |
Benchmark sources
Use public databases or industry reports; always cite sources.
Deliverables
Ready for reporting.
Ratio matrix (grouped with formulas)
Benchmark table (industry averages/medians)
Trend summary (growth, decline, inflections)
Red-flag notes (liquidity, leverage, etc.)
Copy-ready insights with next steps
Report skeleton
Copy into your report template.
1) Ratio Matrix (by category) 2) Benchmarks vs. Industry 3) Trend Highlights 4) Red Flags 5) Summary + Next Steps
Evaluation Rubric
Quality guardrails
Every item must be verifiable.
Data integrity
Three statements aligned, missing values handled.
Ratio coverage
Covers profitability, liquidity, leverage, efficiency.
Interpretation depth
Every conclusion backed by evidence and context.
Industry comparison
Benchmarks or peer ranges included.
Risk flags
Unusual values flagged with follow-up checks.
Self-Test
Quick knowledge check
1-2 points each. Score 5+ to pass.
Which three statements are mandatory?
Score: 2
Income statement, balance sheet, and cash flow.
What is the goal of horizontal analysis?
Score: 1
Compare multiple periods to spot trends and inflections.
Why include industry benchmarks?
Score: 1
To avoid isolated conclusions and see deviations.
What extra data do valuation ratios need?
Score: 1
Share price and shares outstanding.
What to do with abnormal ratios?
Score: 1
Flag them and verify one-off items or data issues.
6 points total. Aim for 5+ before running a real analysis.
Resources
Authoritative sources
All references and baselines in one place.
Skill source
Anthropic skill definition
SCU tools overview
Common tools and ratio categories
Open textbook module
Horizontal, vertical, ratio analysis
ReadyRatios software
Automated ratio reporting baseline
Drivetrain baseline
FP&A automation and visualization
SEC EDGAR filings
Official public filings database
NYU Stern industry data
Damodaran industry averages for benchmarking
Forum feedback
User pain points on missing analytics
Related Links
Next steps inside EKX.AI
Internal links for deeper exploration.
Source Kit
Source, scripts, license
Keep attribution and compliance clear.
| Skill source | https://github.com/anthropics/claude-cookbooks/blob/main/skills/custom_skills/analyzing-financial-statements/SKILL.md |
| Clone command | git clone https://github.com/anthropics/claude-cookbooks.git |
| License | MIT License (Anthropic, 2023) |
| Scripts | calculate_ratios.py, interpret_ratios.py |
FAQ
Common questions
Answer the most common questions.
Ready to analyze
Make financial statement analysis repeatable
Start with the template and ship a repeatable report.