Financial Statement Due Diligence Analyzer
Analyze target company financials to surface M&A risks and earnings quality red flags
What You Can Do
You can rapidly synthesize 2-5 years of income statements, balance sheets, and cash flow statements to uncover hidden risks and accounting anomalies. Claude performs comparative trend analysis, ratio calculations, variance investigations, and earnings quality assessments—surfacing red flags that affect valuation, identifying working capital normalization needs, and pressure-testing management assumptions to validate baseline model inputs.
Features
detects unusual trends, margin compression, and accounting shifts across reporting periods
identifies non-recurring items, aggressive revenue recognition, and sustainability of reported profits
flags working capital volatility, related-party transactions, contingent liabilities, and going concern risks
calculates key financial ratios, cash conversion cycles, and capital intensity to benchmark against peers and historical norms
explains deviations in revenue, EBITDA, and cash flow to uncover one-time events vs. structural issues
tests historical growth rates, margin trends, and capital expenditure patterns for reasonableness
organizes risks by materiality, accounting area, and impact to valuation, with recommended due diligence follow-ups
produces focused questions for management, auditors, and data room review based on identified concerns
Example Output
Example 1: Earnings Quality Red Flag
Input: 3 years of income statements showing revenue growth of 45%, 38%, and 22% with flat EBITDA margins.
Output:
- ⚠️ Revenue Quality Concern: Decelerating top-line growth despite flat margins suggests potential channel mix shift or customer concentration risk
- Finding: Accounts receivable days increased from 35 to 52 days; recommend aging analysis and customer credit review
- Impact to Model: Apply 15-20% conservative revenue growth vs. management's 30% assumption
Example 2: Working Capital Red Flag
Input: Balance sheets showing inventory up 60% YoY, accounts payable unchanged, and cash conversion cycle deteriorating.
Output:
- 🚩 Working Capital Risk: Inventory buildup without corresponding payable extension indicates potential obsolescence or demand softness
- Recommendation: Request inventory aging, SKU-level sales trends, and Q1 sales data to assess NRV reserve needs
- Valuation Impact: Normalize working capital at 18% of sales vs. current 22%; $2.5M one-time cash outflow adjustment
Example 3: Accounting Irregularity
Input: Significant increase in capitalized software and deferred revenue in year 3.
Output:
- ⚠️ Accounting Policy Change: Capitalization policy shift increased assets by $1.8M and reduced P&L charges by $400K annually
- Earnings Quality Impact: Adjusting for consistent accounting reduces normalized EBITDA by 3.5%
- Due Diligence Action: Confirm capitalization policy with external auditors; validate useful life assumptions
What's Included
- SKILL.md: Complete instruction file with systematic analysis framework and red flag triggers
- Financial Statement Template: Structured data entry format for multi-year P&L, balance sheet, and cash flow inputs
- Analysis Checklist: 25-point checklist covering earnings quality, working capital, capital structure, and transaction risk areas
- Red Flag Reference Guide: Common accounting manipulations and anomalies by financial statement line item
- Due Diligence Question Framework: Pre-built follow-up questions organized by risk area for management and auditor interviews
Who It's For
- M&A Analysts and Associates — conducting financial due diligence on acquisition targets across industries
- Investment Banking Advisors — supporting valuation and deal structure recommendations for clients
- Corporate Development Teams — evaluating strategic acquisition targets and validating fit within corporate portfolio
- Private Equity Associates — assessing investment thesis risks and identifying value creation opportunities through operating improvements
- CFOs and Finance Controllers — reviewing seller-side disclosure schedules and validating financial representations in sale processes
Best For
- Target company financial statement review — 2-5 year multi-statement analysis during M&A due diligence phase
- Earnings quality and accounting risk assessment — identifying revenue recognition issues, one-time items, and policy changes
- Working capital and cash flow analysis — assessing normalization needs and cash conversion cycle sustainability
- Valuation model baseline assumption validation — pressure-testing revenue growth, margin, and capital intensity inputs
- Management due diligence question preparation — developing focused inquiry agendas for seller meetings and data room review
You might also like
You'll systematically audit every dollar spent across paid channels, identify hidden inefficiencies, and receive a prioritized playbook of quick wins and strategic shifts. Claude analyzes your channel mix, conversion funnels, and spend patterns to pinpoint exactly where you're overpaying and what to optimize first. Execute the recommendations and watch your CAC drop while maintaining or improving conversion volume.
by sonht1109
You create a living risk matrix that maps execution dependencies across parallel workstreams (legal, regulatory, financing, integration, tax, IT), automatically flags cascading failures where delays in one workstream compromise others, and generates mitigation plans prioritized by critical path impact. The skill translates deal structure, regulatory requirements, and counterparty timelines into a visual risk dashboard that you brief to deal committees weekly.
by sonht1109
You can conduct structured financial due diligence on acquisition targets by analyzing audited and unaudited statements across multiple years. This skill helps you detect earnings manipulation, unsustainable trends, hidden liabilities, and working capital deficiencies that affect valuation. You'll produce a Financial Risk Summary that quantifies impact on deal valuation, debt capacity, and post-acquisition cash generation.
by fastclaw-ai
You can extract and analyze multi-year financial statements (income statements, balance sheets, cash flow statements) to identify discontinuities, related-party transactions, and accounting policy changes. The skill guides you through normalizing GAAP earnings for valuation models, quantifying working capital adjustments, documenting earn-out conditions, and preparing comprehensive findings for investment committee presentations and LOI support.
by skillslib
Design high-converting referral programs from scratch that actually work. Get proven mechanics, tiered incentive structures, legal compliance checklists, and complete tracking implementation. Launch your program with confidence in days, not months.
by sonht1109
This skill enables you to interact with Sentry programmatically via the command line. Authenticate securely, resolve short issue IDs to full bug reports complete with descriptions and stack traces, and extract event details for debugging and reporting purposes. It streamlines the workflow from issue identification to actionable bug report generation.
by sonht1109
You can comprehensively assess your existing debt obligations, model multiple refinancing scenarios across different market conditions, and identify optimal capital structure decisions that minimize borrowing costs. Claude helps you compare fixed vs. floating rate structures, evaluate covenant headroom, build multi-year maturity ladders, and prepare data-driven recommendations for debt management strategy that balances cost reduction with liquidity and compliance.
by sonht1109