financial-forecast

name	financial-forecast
description	Build financial forecasts with revenue modeling, expense projections, cash flow analysis, scenario planning (best/base/worst), and documented assumptions. TRIGGER when: user says /financial-forecast, "forecast financials", "revenue forecast", "cash flow projection", "financial model", "scenario planning".
argument-hint	[entity name] [forecast horizon] [scenario type]
user-invocable	true

Financial Forecast

Build rigorous financial forecasts that model revenue, expenses, and cash flow across multiple scenarios. This skill produces a structured forecast with transparent assumptions, sensitivity analysis, and clear narrative.

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Step 1 — Establish Forecast Parameters

Define the scope and ground rules before modeling.

Parameter	Description	Example
Entity	Company, business unit, or product line	Acme Corp — SaaS Division
Forecast Horizon	Number of months/quarters/years	12 months (monthly granularity)
Base Period	Historical anchor for projections	Trailing 12 months actuals
Reporting Currency	Primary currency; note FX assumptions if multi-currency	USD
Granularity	Monthly, quarterly, or annual	Monthly for Year 1; quarterly for Years 2–3
Model Type	Top-down, bottom-up, or hybrid	Hybrid
Key Stakeholders	Who consumes the forecast	CFO, Board, Investors

Checklist

• Historical data validated and reconciled (minimum 12 months)
• Accounting basis confirmed (accrual vs. cash)
• One-time items identified and normalized from base period
• Seasonality patterns documented
• External benchmarks sourced (industry, peers)

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Step 2 — Revenue Modeling

Build the revenue forecast from drivers, not just growth rates.

Revenue Driver Framework

Driver	Metric	Source	Example Value
New customers	Monthly new logos	Sales pipeline + conversion	25/month
Average deal size	ACV or ARPU	Historical median	$18,000 ACV
Expansion revenue	Net dollar retention	Customer success data	115% NDR
Churn	Gross revenue churn rate	Historical churn cohorts	8% annual
Pricing changes	Effective price increase	Planned price adjustment	+5% in Q3
New product lines	Incremental revenue	Go-to-market plan	$200K in H2

Revenue Build Template

Month	Beginning ARR	New ARR	Expansion	Churn	Ending ARR	Monthly Revenue
Jan
Feb
...
Dec
Total

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Step 3 — Expense Projections

Model costs using a combination of committed, planned, and variable components.

Expense Categories and Drivers

Category	Driver / Basis	Projection Method
Salaries	Headcount plan x avg. comp	Bottom-up from HR plan
Benefits & Taxes	% of salary (typically 20–30%)	Rate x salary base
Contractors	Planned SOWs + ad-hoc estimate	Bottom-up + historical %
Cloud / Hosting	Usage growth tied to revenue/users	Unit economics x projected volume
Software Licenses	Per-seat x headcount	Committed contracts + new seats
Sales & Marketing	% of revenue or fixed program budget	Blended: fixed + variable component
Facilities	Lease terms + operating costs	Contractual obligations
Travel	Per-trip cost x estimated trips	Policy rate x planned activity
Depreciation	Asset schedule	Straight-line on existing + planned
Interest Expense	Debt schedule	Rate x outstanding balance

Expense Summary Template

Category	Q1	Q2	Q3	Q4	Annual	% of Revenue
People (total)
Infrastructure
Sales & Marketing
G&A
D&A
Total OpEx

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Step 4 — Cash Flow Analysis

Translate the P&L forecast into cash movements.

1. Operating Cash Flow: Start with net income; add back non-cash items (D&A, stock-based comp); adjust for working capital changes (AR, AP, deferred revenue).
2. Investing Cash Flow: CapEx, acquisitions, asset disposals.
3. Financing Cash Flow: Debt draws/repayments, equity raises, dividends.
4. Net Cash Position: Ending cash = beginning cash + net cash flow.

Cash Flow Template

Line Item	Q1	Q2	Q3	Q4	Annual
Net Income
+ Depreciation & Amortization
+ Stock-Based Compensation
+/- Working Capital Changes
Operating Cash Flow
- Capital Expenditures
Investing Cash Flow
+/- Debt (net)
+/- Equity (net)
Financing Cash Flow
Net Change in Cash
Beginning Cash Balance
Ending Cash Balance

Cash Runway Calculation

• Monthly burn rate = average of last 3 months operating cash flow (if negative)
• Cash runway (months) = current cash balance / monthly burn rate
• Flag if runway < 12 months

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Step 5 — Scenario Planning

Model three scenarios to bound the range of outcomes.

Assumption	Worst Case	Base Case	Best Case
Revenue growth rate
Gross margin
Headcount additions
Churn rate
Marketing spend
New product revenue

Scenario Summary

Metric	Worst Case	Base Case	Best Case
Total Revenue
Total Expenses
EBITDA
EBITDA Margin
Free Cash Flow
Ending Cash Balance
Cash Runway (months)

Scenario Triggers

Define what real-world events would push toward each scenario:

• Worst Case: Major customer loss, market downturn, regulatory change, key hire departures.
• Best Case: Viral adoption, large enterprise deal, favorable market shift, successful product launch.

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Step 6 — Assumptions Documentation

Every forecast is only as good as its assumptions. Document them explicitly.

Assumptions Log

#	Assumption	Value / Range	Source	Confidence	Review Date
1	Monthly new customer acquisition
2	Average contract value
3	Gross revenue churn rate
4	Avg. fully-loaded cost per employee
5	Cloud cost per unit
6	Effective tax rate
7	Days Sales Outstanding (DSO)
8	Days Payable Outstanding (DPO)

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Output Format

## Financial Forecast — [Entity] — [Horizon]

### 1. Executive Summary
- Key takeaway in 3-5 bullets
- Headline numbers: revenue, EBITDA, cash position

### 2. Revenue Forecast
[Driver-based revenue build with monthly/quarterly detail]

### 3. Expense Forecast
[Categorized expense projections]

### 4. P&L Summary
[Income statement: revenue through net income]

### 5. Cash Flow Forecast
[Operating, investing, financing cash flows; ending balance]

### 6. Scenario Analysis
[Side-by-side comparison of worst/base/best]

### 7. Assumptions & Risks
[Numbered assumptions log; key risks and mitigants]

### 8. Appendix
- Monthly detail tables
- Sensitivity tables (e.g., revenue +/- 10%, COGS +/- 5%)
- Bridge from prior forecast to current

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Quality Checklist

• Revenue drivers are bottom-up, not just "last year + X%"
• Expenses tie to headcount plan and committed contracts
• Cash flow reflects working capital timing, not just P&L
• Three scenarios are meaningfully different, not just +/- 10%
• Every assumption has a source and confidence level
• Model balances (assets = liabilities + equity, if full balance sheet)
• Forecast is compared to prior forecast and actuals (bridge analysis)
• Seasonality is reflected in monthly/quarterly phasing

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Edge Cases

Scenario	Handling Approach
Pre-revenue startup	Use TAM/SAM/SOM framework; anchor to comparable company benchmarks
Highly seasonal business	Use seasonal indices from 2+ years of history; avoid straight-line phasing
Multi-currency operations	Forecast in local currency; translate at forward FX rates; show FX sensitivity
Pending M&A or divestiture	Model standalone and combined; flag integration costs separately
Regulatory uncertainty (e.g., tax reform)	Model with current rules as base; sensitivity on proposed changes
Rapid hypergrowth (>100% YoY)	Use cohort-based revenue model; stress-test unit economics at scale