Financial Statements

# /financial-statements

> If you see unfamiliar placeholders or need to check which tools are connected, see [CONNECTORS.md](../../CONNECTORS.md).

**Important**: This command assists with financial statement workflows but does not provide financial advice. All statements should be reviewed by qualified financial professionals before use in reporting or filings.

Generate financial statements with period-over-period comparison and variance analysis. The workflow below walks through income statement generation; balance sheet and cash flow statement reference formats, GAAP presentation requirements (ASC 220/210/230), and common period-end adjustments are included as supporting reference material.

## Usage

``` /financial-statements <period-type> <period> ```

### Arguments

- `period-type` — The reporting period type: - `monthly` — Single month P&L with prior month and prior year month comparison - `quarterly` — Quarter P&L with prior quarter and prior year quarter comparison - `annual` — Full year P&L with prior year comparison - `ytd` — Year-to-date P&L with prior year YTD comparison - `period` — The period to report (e.g., `2024-12`, `2024-Q4`, `2024`)

## Workflow

### 1. Gather Financial Data

If ~~erp or ~~data warehouse is connected: - Pull trial balance or income statement data for the specified period - Pull comparison period data (prior period, prior year, budget/forecast) - Pull account hierarchy and groupings for presentation

If no data source is connected: > Connect ~~erp or ~~data warehouse to pull financial data automatically. You can also paste trial balance data, upload a spreadsheet, or provide income statement data for analysis.

Prompt the user to provide: - Current period revenue and expense data (by account or category) - Comparison period data (prior period, prior year, and/or budget) - Any known adjustments or reclassifications

### 2. Generate Income Statement

Present in standard multi-column format:

``` INCOME STATEMENT Period: [Period description] (in thousands, unless otherwise noted)

Current Prior Variance Variance Budget Budget Period Period ($) (%) Amount Var ($) -------- -------- -------- -------- -------- -------- REVENUE Product revenue $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Service revenue $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Other revenue $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX -------- -------- -------- -------- -------- TOTAL REVENUE $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX

COST OF REVENUE [Cost items] $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX -------- -------- -------- -------- -------- GROSS PROFIT $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Gross Margin XX.X% XX.X%

OPERATING EXPENSES Research & development $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Sales & marketing $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX General & administrative $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX -------- -------- -------- -------- -------- TOTAL OPERATING EXPENSES $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX

OPERATING INCOME (LOSS) $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Operating Margin XX.X% XX.X%

OTHER INCOME (EXPENSE) Interest income $XX,XXX $XX,XXX $X,XXX X.X% Interest expense ($XX,XXX) ($XX,XXX) $X,XXX X.X% Other, net $XX,XXX $XX,XXX $X,XXX X.X% -------- -------- -------- TOTAL OTHER INCOME (EXPENSE) $XX,XXX $XX,XXX $X,XXX X.X%

INCOME BEFORE TAXES $XX,XXX $XX,XXX $X,XXX X.X% Income tax expense $XX,XXX $XX,XXX $X,XXX X.X% -------- -------- --------

NET INCOME (LOSS) $XX,XXX $XX,XXX $X,XXX X.X% $XX,XXX $X,XXX Net Margin XX.X% XX.X% ```

### 3. Variance Analysis

For each line item, calculate and flag material variances.

#### Variance Calculation

For each line item, calculate: - **Dollar variance:** Current period - Prior period (or current period - budget) - **Percentage variance:** (Current - Prior) / |Prior| x 100 - **Basis point change:** For margins and ratios, express change in basis points (1 bp = 0.01%)

#### Materiality Thresholds

Define what constitutes a "material" variance requiring investigation. Common approaches:

- **Fixed dollar threshold:** Variances