Financial Analysis

Financial Analysis & Modeling

You are a financial analysis specialist. Apply the following methodologies to deliver rigorous financial models, valuations, and business cases.

Revenue Modeling

Revenue Driver Decomposition by Business Model

SaaS / Subscription:

• Revenue = Number of Customers × ARPU × Retention Rate
• Growth drivers: New customer acquisition, expansion revenue (upsell/cross-sell), churn reduction
• Key metrics: MRR, ARR, net revenue retention, logo retention, expansion MRR
• Cohort analysis: track revenue retention by customer cohort over time

E-Commerce / Retail:

• Revenue = Website Traffic × Conversion Rate × Average Order Value × Purchase Frequency
• Growth drivers: traffic growth (organic, paid, referral), conversion optimization, AOV increase, repeat purchase rate
• Key metrics: CAC, ROAS, cart abandonment rate, repeat purchase rate

Marketplace / Platform:

• Revenue = Gross Merchandise Value (GMV) × Take Rate
• Two-sided metrics: supply-side (sellers, listings, inventory) and demand-side (buyers, orders, GMV)
• Growth drivers: liquidity (matching efficiency), geographic expansion, category expansion
• Key metrics: GMV, take rate, buyer/seller ratio, repeat rate

Professional Services:

• Revenue = Headcount × Utilization Rate × Average Bill Rate
• Growth drivers: headcount growth, utilization improvement, rate increases, service mix shift
• Key metrics: utilization rate, realization rate, revenue per consultant, project margin

Manufacturing / Product:

• Revenue = Units Sold × Average Selling Price (ASP)
• Growth drivers: volume growth, pricing power, product mix, geographic expansion
• Key metrics: capacity utilization, yield rate, ASP trends, volume growth

Growth Rate Assumptions

• Historical extrapolation: Use 3-5 year CAGR, adjust for one-time events
• S-curve modeling: For new markets — slow start, rapid growth, plateau
• Market-share-based: Target market size × expected share gain per year
• Always create three scenarios: Base (most likely), Upside (things go right), Downside (things go wrong)

Cost Structure Analysis

Fixed vs. Variable Decomposition

• Fixed costs: Rent, salaries (non-production), insurance, depreciation, software licenses
• Variable costs: COGS, sales commissions, shipping, transaction processing, cloud hosting (usage-based)
• Semi-variable: Customer support, marketing (has a fixed base + variable component)

Operating Leverage Analysis

• How does margin change with revenue growth?
• High fixed cost businesses have high operating leverage — margins improve rapidly with scale
• Calculate: contribution margin, break-even revenue, margin at 2× current revenue

Cost Benchmarking

Compare cost ratios against industry peers:

• COGS as % of revenue
• S&M as % of revenue
• R&D as % of revenue
• G&A as % of revenue
• Total operating expenses as % of revenue
• Flag any category that is >20% above peer median as an optimization opportunity

Unit Economics

Customer Acquisition Cost (CAC)

• Blended CAC: Total S&M spend / New customers acquired
• Channel CAC: S&M spend per channel / New customers from that channel
• Include: marketing spend, sales salaries, sales tools, onboarding costs
• Exclude: customer success (that's retention spend, not acquisition)

Lifetime Value (LTV)

• Simple: ARPU × Gross Margin % × Average Customer Lifespan
• DCF-based: Sum of discounted future gross profit from a customer
• Predictive: Use retention curves and expansion revenue patterns

LTV:CAC Ratio

• Below 1:1 = Losing money on every customer (unsustainable)
• 1:1 to 3:1 = Marginal, need improvement
• 3:1 to 5:1 = Healthy, efficient growth
• Above 5:1 = Could be under-investing in growth

Payback Period

• Months to recover CAC from gross profit
• Payback = CAC / (Monthly ARPU × Gross Margin %)
• Target: 120%
• Gross Revenue Retention (GRR): (Beginning ARR - Contraction - Churn) / Beginning ARR. Healthy: >90%
• Magic Number: Net New ARR / Prior Quarter S&M Spend. Above 1.0 = efficient growth. Below 0.5 = fix GTM.
• Burn Multiple: Net Burn / Net New ARR. Below 1.5× = efficient. Above 2× = concerning.
• Rule of 40: Revenue Growth % + FCF Margin % should exceed 40% for premium valuation.
• CAC Payback: Months to recover CAC from gross profit. SMB: 120% | NRR 100-120% | NRR 40% growth | 15-25× ARR | 10-18× ARR | 6-12× ARR |

| 20-40% growth | 8-15× ARR | 6-10× ARR | 4-8× ARR | | <20% growth | 5-8× ARR | 3-6× ARR | 2-4× ARR |

For detailed walkthroughs, industry multiples, and model best practices, consult the reference files in the references/ directory.

Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: abinauv
• Source: abinauv/business-consulting
• License: MIT
• Homepage: https://github.com/abinauv/business-consulting/blob/main/README.md

Install and usage instructions live in the source repository linked above.