financial-variance

name	financial-variance
description	Variance analysis — actual vs budget, YoY/MoM/QoQ deltas, bridge decomposition.
tags	["finance","variance","budget","actuals","yoy","mom","qoq"]

Financial Variance Analysis Skill

When to Use This Skill

Use this skill when the user asks for:

• Variance analysis (actual vs budget, forecast, prior period)
• Year-over-year (YoY), Month-over-month (MoM), Quarter-over-quarter (QoQ) comparisons
• Bridge decompositions explaining delivery vs target
• Root cause analysis of financial variances
• Performance commentary on financial metrics

Core Concepts

Variance Types

1. Price Variance: Difference due to unit price changes
2. Volume Variance: Difference due to quantity/volume changes
3. Mix Variance: Difference due to product/segment mix shifts
4. Rate Variance: Exchange rate or rate-based variances
5. Timing Variance: Differences due to timing of transactions

Variance Cascade

• Delivery: Actual - Target (or Forecast)
• Price Impact: (Actual Price - Budget Price) × Actual Volume
• Volume Impact: (Actual Volume - Budget Volume) × Budget Price
• Mix Impact: Sum of (Actual Mix % - Budget Mix %) × Budget Price × Total Volume

Common Analysis Patterns

YoY Comparison

SELECT 
    period,
    SUM(CASE WHEN period = '2025' THEN revenue END) as actual_revenue,
    SUM(CASE WHEN period = '2024' THEN revenue END) as prior_period_revenue,
    SUM(CASE WHEN period = '2025' THEN revenue END) - SUM(CASE WHEN period = '2024' THEN revenue END) as yoy_delta,
    (SUM(CASE WHEN period = '2025' THEN revenue END) * 1.0 / NULLIF(SUM(CASE WHEN period = '2024' THEN revenue END), 0) - 1) * 100 as yoy_pct
FROM sheet_
GROUP BY period
ORDER BY period;

Budget Variance Bridge

SELECT 
    category,
    budget_amount,
    actual_amount,
    actual_amount - budget_amount as variance_abs,
    (actual_amount * 1.0 / NULLIF(budget_amount, 0) - 1) * 100 as variance_pct
FROM sheet_
ORDER BY ABS(actual_amount - budget_amount) DESC;

Output Format

When presenting variance analysis:

1. State the overall variance (absolute and percentage)
2. Break down by main drivers (price, volume, mix)
3. Highlight outliers requiring attention
4. Provide context (seasonality, one-time items, etc.)

Avoiding Common Mistakes

• Don't confuse sign conventions (positive variance isn't always good)
• Account for currency effects when comparing international entities
• Validate that restated budget vs actual is on comparable basis
• Watch for timing differences that will reverse