MCPInstall

finance

Financial analysis expertise for financial modeling (DCF, LBO, M&A), valuation, financial statement analysis, capital allocation, treasury management, and corporate finance decisions. Use when building financial models, analyzing statements, or making investment decisions.

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Install

Works with every agent the skills CLI supports.

npx skills add https://github.com/travisjneuman/.claude --skill finance
  1. 01

    Install

    Run the command in your project. The CLI asks which agents to install for.

  2. 02

    Describe the task

    Ask your agent for something this skill covers. It loads finance automatically when relevant.

  3. 03

    Review the result

    The agent follows the SKILL.md steps, scripts and references bundled with the skill.

SKILL.md

The instructions your agent reads when the skill is triggered.

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

CategoryRatioFormulaBenchmark
ProfitabilityGross MarginGross Profit / RevenueIndustry specific
Operating MarginEBIT / Revenue15-25% (varies)
Net MarginNet Income / Revenue10-20% (varies)
ROICNOPAT / Invested Capital> WACC
ROENet Income / Equity15-20%+
LiquidityCurrent RatioCurrent Assets / Current Liabilities1.5-2.0x
Quick Ratio(CA - Inventory) / CL1.0x+
Cash RatioCash / Current Liabilities0.2-0.5x
LeverageDebt/EquityTotal Debt / Total Equity< 1.0x
Debt/EBITDATotal Debt / EBITDA2-3x (IG), 4-6x (HY)
Interest CoverageEBIT / Interest Expense> 3x
EfficiencyAsset TurnoverRevenue / Total AssetsIndustry specific
Inventory DaysInventory / (COGS/365)Industry specific
DSOAR / (Revenue/365)30-45 days
DPOAP / (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

Year12345Terminal
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
5. Geographic exposure
6. Capital structure

ADJUSTMENTS:
- Control premium (20-30% for acquisition)
- Liquidity discount (10-30% for private)
- Size discount (10-20% for smaller)

Precedent Transaction Analysis

TRANSACTION MULTIPLES:
- EV/LTM Revenue
- EV/LTM EBITDA
- EV/NTM EBITDA
- Transaction Premium to unaffected price

ADJUSTMENTS:
- Market conditions at time of deal
- Strategic vs. financial buyer
- Competitive auction vs. negotiated
- Synergy assumptions baked in

Sum-of-the-Parts (SOTP)

METHODOLOGY:
1. Identify distinct business segments
2. Value each segment independently
3. Apply segment-specific multiples/DCF
4. Sum segment values
5. Subtract corporate costs (capitalized)
6. Adjust for holding company discount (10-20%)

CONGLOMERATE DISCOUNT FACTORS:
- Complexity premium demanded by investors
- Capital allocation inefficiencies
- Management distraction
- Lack of pure-play comparables

Leveraged Buyout (LBO) Analysis

LBO Model Structure

SOURCES & USES:
Sources:
- Senior Debt (Term Loan A/B)
- Subordinated Debt (Mezz, High Yield)
- Equity Contribution

Uses:
- Purchase Price
- Refinance Existing Debt
- Transaction Fees
- Cash to Balance Sheet

KEY METRICS:
- Entry Multiple: EV / LTM EBITDA
- Exit Multiple: Assumed sale multiple
- Equity IRR: Target 20-25%+
- Cash-on-Cash: 2.0-3.0x in 5 years
- MOIC: Multiple of Invested Capital

LBO Returns Framework

IRR TargetHold PeriodRequired MOIC
20%3 years1.7x
20%5 years2.5x
25%3 years2.0x
25%5 years3.0x

Value Creation Sources

                        % of Total Returns (typical)
EBITDA Growth           40-50%
- Revenue growth
- Margin improvement

Multiple Expansion      20-30%
- Market timing
- Operational improvement
- Strategic repositioning

Debt Paydown           20-30%
- Cash flow generation
- Working capital improvement

M&A Financial Analysis

Accretion/Dilution Analysis

STANDALONE EPS (Acquirer):
Net Income / Shares Outstanding = EPS

PRO FORMA EPS:
(Combined Net Income - Synergies + Interest Cost) / New Shares = PF EPS

ACCRETION/(DILUTION):
(PF EPS - Standalone EPS) / Standalone EPS = %

BREAKEVEN SYNERGIES:
Synergies needed to make deal EPS neutral

Synergy Analysis

Synergy TypeTypical RangeRealization Timeline
Cost Synergies5-15% of target costs1-3 years
Revenue Synergies2-5% of combined revenue2-5 years

Deal Structure Considerations

CONSIDERATION:
- Cash: Immediate value, tax implications
- Stock: Alignment, dilution, tax deferral
- Mixed: Balance of above

FINANCING:
- Debt capacity analysis
- Credit rating implications
- Optimal capital structure
- Bridge financing needs

Capital Allocation Framework

Capital Allocation Hierarchy

1. MAINTAIN CORE BUSINESS
   - Maintenance CapEx
   - Working capital
   - Required debt service

2. INVEST IN GROWTH
   - Growth CapEx (> WACC hurdle)
   - M&A (strategic fit + returns)
   - R&D / Innovation

3. RETURN TO SHAREHOLDERS
   - Dividends (sustainable payout)
   - Share repurchases (below intrinsic value)

4. BUILD FLEXIBILITY
   - Cash reserves
   - Debt capacity
   - Strategic optionality

Investment Hurdle Rates

Investment TypeTypical HurdleRisk Premium
Maintenance CapExWACCNone
Growth CapExWACC + 2-3%Low
Domestic M&AWACC + 3-5%Medium
International M&AWACC + 5-8%High
Venture/Innovation25-30% IRRVery High

ROIC vs WACC Framework

VALUE CREATION:
ROIC > WACC → Value creating
ROIC = WACC → Value neutral
ROIC < WACC → Value destroying

ECONOMIC PROFIT:
Economic Profit = (ROIC - WACC) x Invested Capital

SPREAD ANALYSIS:
Track ROIC-WACC spread over time
Target: Positive and expanding spread

Treasury & Risk Management

Working Capital Management

CASH CONVERSION CYCLE:
CCC = DSO + DIO - DPO

DSO (Days Sales Outstanding) = AR / (Revenue/365)
DIO (Days Inventory Outstanding) = Inventory / (COGS/365)
DPO (Days Payable Outstanding) = AP / (COGS/365)

OPTIMIZATION LEVERS:
- Accelerate collections (DSO reduction)
- Improve inventory turns (DIO reduction)
- Extend payment terms (DPO increase)
- Supply chain financing

Hedging Strategies

Risk TypeHedging InstrumentsStrategy
FX RiskForwards, Options, SwapsNatural hedging, rolling hedge
Interest RateSwaps, Caps, FloorsFixed/floating mix
CommodityFutures, OptionsCost certainty for inputs
CreditCDS, InsuranceCounterparty protection

Capital Structure Optimization

OPTIMAL CAPITAL STRUCTURE:
Balance:
- Tax shield benefits of debt
- Bankruptcy/distress costs
- Financial flexibility
- Credit rating implications

CREDIT METRICS TARGETS:
Investment Grade:
- Debt/EBITDA: 2-3x
- Interest Coverage: > 5x
- FFO/Debt: > 30%

High Yield:
- Debt/EBITDA: 4-6x
- Interest Coverage: > 2x
- FFO/Debt: 15-25%

Investor Relations

Earnings Call Preparation

KEY COMPONENTS:
1. Prepared remarks (10-15 min)
   - Financial highlights
   - Operational performance
   - Strategic updates
   - Guidance

2. Q&A preparation
   - Anticipated questions
   - Approved responses
   - Escalation protocols

3. Supplemental materials
   - Earnings release
   - Investor presentation
   - Financial supplement

Guidance Framework

Guidance TypeFrequencySpecificity
RevenueQuarterlyRange
EPSQuarterlyRange
Cash FlowAnnualTarget
CapExAnnualRange
Long-term TargetsInvestor DayDirectional

Financial Planning & Analysis

Rolling Forecast Model

FREQUENCY: Monthly or Quarterly
HORIZON: 12-18 months rolling

COMPONENTS:
- Revenue by segment/product
- Gross margin drivers
- Operating expense detail
- Working capital assumptions
- CapEx plan
- Cash flow projection

VARIANCE ANALYSIS:
- Budget vs. Actual
- Prior forecast vs. Current
- Volume vs. Price vs. Mix

Budget Process Timeline

PhaseTimingActivities
Strategic PlanningQ2Long-range plan update
Guidance SettingQ3Preliminary targets
Detailed BudgetingQ3-Q4Bottom-up plans
Review & ApprovalQ4Executive/Board approval
CommunicationQ4Cascaded targets

See Also

  • Business Strategy
  • Risk Management
  • Operations

FAQ

What does the finance skill do?

Financial analysis expertise for financial modeling (DCF, LBO, M&A), valuation, financial statement analysis, capital allocation, treasury management, and corporate finance decisions. Use when building financial models, analyzing statements, or making investment decisions.

How do I install finance?

Run npx skills add https://github.com/travisjneuman/.claude --skill finance in your project. The skills CLI detects the agents you use and copies the skill into the right folder. For Claude Code you can also place the skill folder at ~/.claude/skills/finance/ (personal) or .claude/skills/finance/ (project).

Which AI agents can use finance?

Any agent that supports the open Agent Skills format (a folder with a SKILL.md file), including Claude Code, Codex, Cursor, GitHub Copilot, Gemini CLI, Windsurf, Cline, OpenCode and more.

Is finance safe to install?

No partner security audit is available yet. Skills can run commands and scripts, so read the SKILL.md and any bundled files before installing.

Who maintains finance?

It is published by travisjneuman in travisjneuman/.claude. It has 376 recorded installs.

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