lerianstudio/financial-modeling

Financial Modeling Workflow

This skill provides a structured workflow for building financial models using the financial-modeler agent.

Workflow Overview

The financial modeling workflow follows 6 phases:

| Phase | Name | Description | |-------|------|-------------| | 1 | Scoping | Define model purpose and requirements | | 2 | Architecture | Design model structure | | 3 | Assumptions | Document all model inputs | | 4 | Build | Construct model with formulas | | 5 | Validation | Test and verify model | | 6 | Documentation | Prepare user guide and audit trail |

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Phase 1: Scoping

MANDATORY: Define model purpose before building

Questions to Answer

| Question | Purpose | |----------|---------| | What decision does this model support? | Ensures relevance | | What type of model is needed? | Sets approach | | What level of detail is required? | Scopes complexity | | Who will use the model? | Tailors design | | What scenarios are needed? | Plans flexibility |

Model Type Selection

| Type | Use Case | Key Outputs | |------|----------|-------------| | DCF | Intrinsic valuation | Enterprise Value, Equity Value | | Trading Comps | Relative valuation | Implied multiples | | LBO | PE acquisition | IRR, MOIC, sources/uses | | M&A | Strategic acquisition | Accretion/dilution, synergies | | Three-Statement | Operating projections | IS, BS, CF integrated |

Blocker Check

If ANY of these are unclear, STOP and ask:

• Model purpose
• Model type
• Key assumptions (WACC, growth, multiples)
• Scenario requirements

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Phase 2: Architecture

MANDATORY: Design structure before building

Architecture Principles

| Principle | Description | |-----------|-------------| | Input separation | All inputs in dedicated section | | No hardcoding | No numbers in formulas | | Consistent formulas | Same formula across row | | Error checks | Validation on each sheet | | Clear flow | Logical left-to-right, top-to-bottom |

Standard Model Structure

| Section | Contents | |---------|----------| | Cover | Model name, version, date, author | | Inputs | All assumptions in one place | | Historical | Historical financial data | | Projections | Projected financials | | Valuation | DCF, comps, or transaction calcs | | Sensitivity | Sensitivity tables | | Output | Summary and key metrics | | Checks | Error checking |

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Phase 3: Assumptions

MANDATORY: Document ALL assumptions with sources

Required Assumption Categories

| Category | Examples | |----------|----------| | Operating | Revenue growth, margins, CapEx | | Valuation | WACC, terminal growth, multiples | | Transaction | Entry price, financing, fees | | Timing | Projection period, exit year |

Assumption Documentation Standard

| Element | Requirement | |---------|-------------| | Assumption name | Clear description | | Value | Base case value | | Source | Where value came from | | Sensitivity | Range for testing |

Blocker: WACC Components

MUST get user input on:

• Risk-free rate source
• Equity risk premium source
• Beta source and adjustment
• Capital structure assumption

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Phase 4: Build

Dispatch to specialist with full context

Agent Dispatch

Task tool:
  subagent_type: "ring:financial-modeler"
  prompt: |
    Build financial model per these specifications:

    **Purpose**: [decision supported]
    **Model Type**: [DCF/LBO/M&A/Operating]

    **Architecture**:
    [From Phase 2]

    **Assumptions**:
    [From Phase 3]

    **Historical Data**:
    [Attach historical financials]

    **Required Output**:
    - Model structure per architecture
    - All assumptions in input section
    - Sensitivity analysis
    - Scenario analysis (base/upside/downside)
    - Error checks

Required Output Elements

| Element | Requirement | |---------|-------------| | Model Summary | Key outputs and conclusions | | Assumptions | Complete input section | | Model Structure | Per architecture design | | Key Outputs | Valuation, metrics, returns | | Sensitivity | 2x2 tables for key drivers | | Validation | Error checks passing |

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Phase 5: Validation

MANDATORY: Test model before delivery

Validation Tests

| Test | Description | |------|-------------| | Balance Sheet | Assets = Liabilities + Equity | | Cash Flow | CF reconciles to B/S cash | | Circular Control | Circulars iterate and converge | | Formula Audit | No hardcoded values in calcs | | Reasonableness | Results within expected range |

Sensitivity Testing

| Test | Purpose | |------|---------| | WACC sensitivity | Valuation impact of discount rate | | Growth sensitivity | Valuation impact of growth | | Margin sensitivity | Valuation impact of profitability | | Exit multiple sensitivity | LBO return sensitivity |

Anti-Rationalization

| Rationalization | Why It's WRONG | Required Action | |-----------------|----------------|-----------------| | "Model foots, it's correct" | Footing ≠ correct logic | VALIDATE methodology | | "Sensitivity shows expected range" | Range needs to be appropriate | VERIFY ranges sensible | | "Used industry WACC" | WACC must be calculated | CALCULATE and document |

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Phase 6: Documentation

MANDATORY: Document for future users

Documentation Checklist

| Element | Status | |---------|--------| | Model summary | Required | | Assumption register | Required | | Methodology description | Required | | User instructions | Required | | Error check explanations | Required | | Version history | Required |

Output Format

See shared-patterns/execution-report.md for base metrics.

Modeling-Specific Metrics:

• model_tabs: N
• assumptions_documented: N
• scenarios: N
• sensitivity_tests: N
• validation_tests: N passed

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Pressure Resistance

See shared-patterns/pressure-resistance.md for universal pressures.

Modeling-Specific Pressures

| Pressure Type | Request | Agent Response | |---------------|---------|----------------| | "Just give me a valuation" | "Valuations require documented methodology. I'll build proper model." | | "Use 10% WACC" | "WACC must be calculated from components. I'll show the build-up." | | "Skip sensitivity" | "Sensitivity is required for decision support. I'll include key drivers." | | "Copy last model" | "Each model needs fresh design. Prior models are reference, not template." |

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Anti-Rationalization Table

See shared-patterns/anti-rationalization.md for universal anti-rationalizations.

Modeling-Specific Anti-Rationalizations

| Rationalization | Why It's WRONG | Required Action | |-----------------|----------------|-----------------| | "Quick model doesn't need structure" | ALL models need structure | DESIGN architecture | | "Terminal value is just a plug" | TV often 60%+ of value | CALCULATE properly | | "Industry multiple is obvious" | Multiples need source | CITE and date source | | "Circular doesn't matter" | Circulars affect results | HANDLE explicitly |

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Execution Report

Upon completion, report:

| Metric | Value | |--------|-------| | Duration | Xm Ys | | Model Tabs | N | | Assumptions | N documented | | Scenarios | N | | Sensitivity Tests | N | | Validation Tests | N/N passed | | Result | COMPLETE/PARTIAL |

Quality Indicators

| Indicator | Status | |-----------|--------| | All inputs in input section | YES/NO | | No hardcoded values | YES/NO | | Error checks pass | YES/NO | | Sensitivity included | YES/NO | | Methodology documented | YES/NO |