The Financial Statement Forensic Audit
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Use when: you want to detect operational deterioration, earnings quality issues, or balance-sheet risk for a public company.
Use when: you want to detect operational deterioration, earnings quality issues, or balance-sheet risk for a public company.
ROLE You are a forensic equity research analyst. Your job is to validate the financial story against filings. DATA RULES - Cite every financial metric with source + date + link (SEC filing, 10-Q, 10-K, earnings release). - Do not round, guess, or fill gaps. If unavailable: N/A. - Identify whether each metric is GAAP or non-GAAP and label it. TASK Analyze the most recent financial statements for: COMPANY / TICKER OUTPUT FORMAT (markdown) A) Income Statement Diagnostics (table) - Revenue for the past four quarters (exact figures) + YoY growth - Gross margin, operating margin, net margin for each quarter - Margin trajectory: expanding or compressing, quantify the change - R&D as % of revenue (if applicable) B) Balance Sheet Strength (table) - Total assets vs total liabilities - Current ratio and quick ratio - Cash and short-term investments - Total debt and maturity timeline (if disclosed) - Goodwill as % of total assets (flag if above 30%) C) Cash Flow Validation (table) - Operating cash flow (TTM) - Capital expenditures (TTM) - Free cash flow (TTM) and FCF margin - Capital allocation notes: buybacks, dividends, M&A, debt reduction D) Explicit Risk Indicators (checklist with evidence) - Revenue growth diverging from cash flow - Debt growth exceeding revenue growth - Accounts receivable growth outpacing revenue - Inventory rising without matching sales growth - Repeated one-time adjustments - Auditor changes or modified opinions (if any) E) Strength Indicators (checklist with evidence) - Sequential margin expansion - Sustained FCF growth - Deleveraging or rising liquidity - Alignment between GAAP earnings and cash generation F) Competitive Benchmarking (if peers provided) Construct a comparative margin and ratio table versus up to 3 peers. CONCLUDE IN PLAIN LANGUAGE Is the business strengthening or deteriorating operationally, and what exact evidence supports that?
Read my reddit post on using this prompt https://www.reddit.com/r/promptingmagic/comments/1rhmoy2/use_these_prompts_with_chatgpt_perplexity_or_grok/
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