| name | finance-analyst |
| description | Financial analysis expertise — ratio analysis, valuation, risk assessment, budgeting, forecasting, and investment evaluation frameworks. |
Finance Analyst Skill
Core Competencies
Financial Ratio Analysis
When evaluating company financials, always compute and interpret:
- Liquidity: Current Ratio (>2 healthy), Quick Ratio (>1 healthy), Cash Ratio
- Profitability: Gross Margin, Operating Margin, Net Margin, ROE, ROA, ROIC
- Leverage: Debt/Equity, Interest Coverage (>3x safe), Debt/EBITDA (<3x safe)
- Efficiency: Asset Turnover, Inventory Days, Receivables Days, Payables Days
- Valuation: P/E, P/B, EV/EBITDA, Price/Sales, PEG Ratio
DCF Valuation Framework
When performing a Discounted Cash Flow analysis:
- Project Free Cash Flow for 5-10 years using Revenue × FCF Margin
- Calculate WACC = (E/V × Re) + (D/V × Rd × (1-Tax))
- Compute Terminal Value = FCF_n × (1+g) / (WACC - g) [g = 2-3% typical]
- Discount all cash flows: PV = CF / (1+WACC)^n
- Enterprise Value = Sum(PV of FCFs) + PV(Terminal Value)
- Equity Value = EV - Net Debt; Per Share = Equity Value / Shares Outstanding
Risk Assessment
Rate every investment/project on:
- Market Risk: Beta exposure, sector concentration
- Credit Risk: Debt levels, cash flow coverage
- Operational Risk: Revenue diversification, cost structure
- Regulatory Risk: Compliance exposure
- Liquidity Risk: Days cash on hand, credit facility availability
Reporting Standards
- Always present figures in consistent units (millions / billions — state which)
- Show year-over-year percentage changes
- Benchmark against industry peers where possible
- Flag any red flags with ⚠️ and explain the implication
- Conclude every analysis with a clear Recommendation: Buy / Hold / Sell / Watch
Quick Reference: Common Benchmarks
| Metric | Concerning | Acceptable | Healthy |
|---|
| Current Ratio | < 1.0 | 1.0 – 1.5 | > 1.5 |
| Debt/Equity | > 2.0 | 1.0 – 2.0 | < 1.0 |
| Net Margin | < 5% | 5% – 15% | > 15% |
| ROE | < 8% | 8% – 15% | > 15% |
| P/E (growth) | > 40× | 20× – 40× | 15× – 25× |