finance

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• SKILL.md
• corporate-finance-expert.md · references/
• financial-modeling-master.md · references/
• ma-due-diligence-specialist.md · references/

SKILL.md (first lines)

# Financial Analysis Expert

Comprehensive financial frameworks for modeling, valuation, and corporate finance decisions.

## Financial Statement Analysis

### DuPont Analysis (5-Factor)

Decompose ROE into operational drivers:

```
ROE = Net Profit Margin x Asset Turnover x Equity Multiplier

Extended (5-Factor):
ROE = (EBIT/Sales) x (Sales/Assets) x (Assets/Equity) x (EBT/EBIT) x (NI/EBT)
    = Operating Margin x Asset Turnover x Leverage x Interest Burden x Tax Burden
```

### Key Financial Ratios

| Category          | Ratio             | Formula                              | Benchmark            |
| ----------------- | ----------------- | ------------------------------------ | -------------------- |
| **Profitability** | Gross Margin      | Gross Profit / Revenue               | Industry specific    |
|                   | Operating Margin  | EBIT / Revenue                       | 15-25% (varies)      |
|                   | Net Margin        | Net Income / Revenue                 | 10-20% (varies)      |
|                   | ROIC              | NOPAT / Invested Capital             | > WACC               |
|                   | ROE               | Net Income / Equity                  | 15-20%+              |
| **Liquidity**     | Current Ratio     | Current Assets / Current Liabilities | 1.5-2.0x             |
|                   | Quick Ratio       | (CA - Inventory) / CL                | 1.0x+                |
|                   | Cash Ratio        | Cash / Current Liabilities           | 0.2-0.5x             |
| **Leverage**      | Debt/Equity       | Total Debt / Total Equity            | < 1.0x               |
|                   | Debt/EBITDA       | Total Debt / EBITDA                  | 2-3x (IG), 4-6x (HY) |
|                   | Interest Coverage | EBIT / Interest Expense              | > 3x                 |
| **Efficiency**    | Asset Turnover    | Revenue / Total Assets               | Industry specific    |
|                   | Inventory Days    | Inventory / (COGS/365)               | Industry specific    |
|                   | DSO               | AR / (Revenue/365)                   | 30-45 days           |
|                   | DPO               | AP / (COGS/365)                      | 30-60 days           |

### Cash Flow Analysis

```
FREE CASH FLOW (FCF):
Operating Cash Flow
- Capital Expenditures
= Free Cash Flow

UNLEVERED FREE CASH FLOW (for valuation):
EBIT
x (1 - Tax Rate)
= NOPAT
+ Depreciation & Amortization
- Change in Working Capital
- Capital Expenditures
= Unlevered Free Cash Flow

LEVERED FREE CASH FLOW:
Unlevered FCF
- Interest Expense x (1 - Tax Rate)
- Mandatory Debt Repayments
+ Net Borrowing
= Levered Free Cash Flow
```

## Valuation Methodologies

### Discounted Cash Flow (DCF)

```
ENTERPRISE VALUE:
         T    UFCFt           Terminal Value
EV = Σ  ───────────  +  ─────────────────────
        t=1 (1+WACC)^t      (1+WACC)^T

TERMINAL VALUE (Perpetuity Growth):
                  UFCF(T+1)
Terminal Value = ───────────
                 WACC - g

TERMINAL VALUE (Exit Multiple):
Terminal Value = EBITDA(T) x Exit Multiple

EQUITY VALUE:
Equity Value = Enterprise Value - Net Debt + Cash
```

### DCF Model Template

| Year            | 1   | 2   | 3   | 4   | 5   | Terminal |
| --------------- | --- | --- | --- | --- | --- | -------- |
| Revenue         |     |     |     |     |     |          |
| Growth %        |     |     |     |     |     |          |
| EBITDA          |     |     |     |     |     |          |
| Margin %        |     |     |     |     |     |          |
| D&A             |     |     |     |     |     |          |
| EBIT            |     |     |     |     |     |          |
| Tax             |     |     |     |     |     |          |
| NOPAT           |     |     |     |     |     |          |
| + D&A           |     |     |     |     |     |          |
| - CapEx         |     |     |     |     |     |          |
| - NWC Change    |     |     |     |     |     |          |
| **UFCF**        |     |     |     |     |     |          |
| Discount Factor |     |     |     |     |     |          |
| **PV of UFCF**  |     |     |     |     |     |          |

### Comparable Company Analysis

```
TRADING MULTIPLES:
- EV/Revenue
- EV/EBITDA
- EV/EBIT
- P/E
- P/B

SELECTION CRITERIA:
1. Industry/sector alignment
2. Size (revenue, market cap)
3. Growth profile
4. Profitability profile

From travisjneuman/.claude, MIT.

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