Financial Ratio Analysis — SKILL.md#

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When to Use This Skill#

Use when a user asks for:

• Financial ratio analysis for a QBO-connected client
• Profitability, liquidity, leverage, or efficiency metrics
• DuPont decomposition or Altman Z-Score analysis
• Month-over-month, QoQ, or YoY ratio comparison
• Ratio benchmarking against industry averages
• Trend analysis across 6 months of ratios
• Trend reversal detection for any financial ratio
• CDC (change data capture) on ratio movements

NOT for:

• Bank reconciliation → use bank-reconciliation
• P&L variance analysis (line-item drill-down) → use pl-deep-analysis
• Cash flow forecasting → use cash-flow-forecast
• AR collections aging → use ar-collections
• Budget vs. actual → use budget-vs-actual

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Quick Invocation#

bash

# Standard monthly ratio report
python3 scripts/pipelines/financial-ratios.py --slug sb-paulson --month 2026-03

# Custom output directory
python3 scripts/pipelines/financial-ratios.py --slug <client-slug> --month 2026-03 --out ~/Desktop/reports

# QBO sandbox
python3 scripts/pipelines/financial-ratios.py --slug sb-paulson --month 2026-03 --sandbox

Unknown slugs use default thresholds and disable inventory/valuation ratios unless SOP file found.

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What It Produces#

Excel workbook saved to ~/Desktop (or --out path): FinancialRatios_{slug}_{YYYY_MM}.xlsx

TabContentsRatio SummaryAll ratios with traffic lights, benchmarks, DuPont & Altman summaryProfitabilityGross/Operating/Net margins, ROA, ROE, EBITDA margin + 6-mo trendLiquidityCurrent/Quick/Cash ratios, Working capital + 6-mo trendLeverageD/E, D/A, Interest coverage, Equity multiplier + 6-mo trendEfficiencyAsset/Inventory/Receivable/Payable turnover, DSO, DPO, CCC + 6-mo trendGrowthRevenue (MoM/QoQ/YoY), Expense, Net income growth + 6-mo trendDuPont Analysis3-factor + 5-factor ROE decomposition, 6-month component trendTrendsAll ratios × 6 months with direction arrows + trend reversal flagsCDC LogRatio changes vs. prior run with trend reversal detection

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Ratio Categories#

Profitability#

RatioFormulaGross Margin %Gross Profit / Revenue × 100Operating Margin %EBIT / Revenue × 100Net Margin %Net Income / Revenue × 100EBITDA Margin %EBITDA / Revenue × 100ROANet Income / Total Assets × 100ROENet Income / Total Equity × 100

Liquidity#

RatioFormulaCurrent RatioCurrent Assets / Current LiabilitiesQuick Ratio(Current Assets − Inventory) / Current LiabilitiesCash RatioCash / Current LiabilitiesWorking CapitalCurrent Assets − Current LiabilitiesWorking Capital RatioWorking Capital / Total Assets × 100

Leverage#

RatioFormulaDebt-to-EquityTotal Liabilities / Total EquityDebt-to-AssetsTotal Liabilities / Total AssetsInterest CoverageEBIT / Interest ExpenseEquity MultiplierTotal Assets / Total Equity

Efficiency#

RatioFormulaAsset TurnoverRevenue / Total AssetsInventory TurnoverCOGS / Inventory (annualized)Receivable TurnoverRevenue / Accounts ReceivableDSO (Days Sales Outstanding)AR / (Revenue / Days)Payable TurnoverCOGS / Accounts PayableDPO (Days Payable Outstanding)AP / (COGS / Days)Cash Conversion CycleDSO + DIO − DPO

Growth#

RatioFormulaRevenue Growth MoM(Current − Prior) /Revenue Growth QoQ(Current − 3mo ago) /Revenue Growth YoY(Current − 12mo ago) /Expense Growth(Current Opex − Prior Opex) /Net Income Growth(Current NI − Prior NI) /

Valuation (SOP-gated)#

RatioFormulaRevenue MultipleEnterprise Value / (Revenue × 12)EBITDA MultipleEnterprise Value / (EBITDA × 12)

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DuPont Analysis#

Three-Factor Model#

text

ROE = Net Margin × Asset Turnover × Equity Multiplier

Five-Factor Model#

text

ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Equity Multiplier

Both models computed; trend shown for each component across 6 months.

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Altman Z-Score#

Bankruptcy risk indicator. Model selected automatically by entity_type in SOP config:

ModelUsed ForZonesZ' (Revised)Private/Services (default)Safe >2.9 | Grey 1.23-2.9 | Distress <1.23Z (Original)ManufacturingSafe >2.99 | Grey 1.81-2.99 | Distress <1.81

Formula (Z' model): Z' = 0.717×(WC/TA) + 0.847×(RE/TA) + 3.107×(EBIT/TA) + 0.420×(BVE/TL) + 0.998×(Revenue/TA)

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Traffic Light Scoring#

Each ratio scores GREEN / YELLOW / RED based on thresholds configured per client SOP.

• GREEN: Within healthy range
• YELLOW: Watch — approaching threshold
• RED: Action required

Thresholds are configured in CLIENT_CONFIGS within the script. Override by editing the dict or adding a client SOP file.

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Trend Reversal Detection#

The pipeline detects when a ratio reverses direction over the 6-month window:

• Compares direction of first half vs. second half of history
• Flags ⚡ Trend Reversal — Now Improving or ⚠ Trend Reversal — Now Declining
• Flagged prominently in Trends tab and CDC Log

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Client SOP Integration#

Place a sop.md file at clients/{slug}/sop.md. The pipeline reads it to detect:

SOP SignalEffect"POS collection" / "no accounts receivable"Disables AR ratios (DSO, receivable turnover)"no inventory" / "service-based"Disables inventory ratios"manufacturing" / "distribution"Switches to original Altman Z modelenterprise value: $XEnables valuation ratios (revenue/EBITDA multiples)benchmark: {key} {value}Overrides specific benchmark values

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Client Configuration#

Add clients to CLIENT_CONFIGS in the script with:

• ratios_enabled list (which ratios to compute/display)
• thresholds dict per ratio: {"green": (min, max), "yellow": (min, max)}
• benchmarks dict per ratio: Decimal values
• entity_type: "services" or "manufacturing" (for Altman Z model)

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QBO Data Pulled#

ReportPurposeP&L (current month)Revenue, COGS, OpEx, Net Income, Interest, D&ABalance Sheet (current month-end)Assets, Liabilities, Equity, Cash, AR, Inventory, APCash Flow (current month)Operating/Investing/Financing cash flowsP&L (prior month)MoM growth ratiosP&L (3 months ago)QoQ growth ratioP&L (12 months ago)YoY growth ratioAll of the above × 6 monthsHistorical trend analysis

Total QBO calls: ~17 per run (6-month history + current + prior + QoQ + YoY)

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CDC Cache#

Cache stored at: .cache/financial-ratios/{slug}.json

Tracks:

• All ratio values from prior run
• Detects per-ratio changes (delta + % change)
• Flags trend reversals when 6-month history available
• Compares run-over-run for drift monitoring

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Technical Notes#

• All financial math: Python Decimal (no floating-point errors)
• Division-by-zero: returns ZERO, never crashes
• Missing QBO lines: ZERO (safe fallback), does not inflate ratios
• Inventory turnover: annualized (× 12 for monthly periods)
• Interest coverage = 999.99 when no interest expense (signals no debt burden)
• Altman Z-Score uses book value of equity (not market cap) for private company model
• EBITDA = EBIT + D&A; EBIT = Net Income + Interest + Taxes
• Operating margin uses EBIT as proxy for operating income if QBO doesn't separate it

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Files#

FileDescriptionscripts/pipelines/financial-ratios.pyMain pipeline scriptskills/financial-ratios/SKILL.mdThis file.cache/financial-ratios/{slug}.jsonCDC cache per client

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