Automated Ratio Analysis

Financial ratios are the vocabulary of financial analysis. Gross margin, operating margin, current ratio, debt-to-equity, return on equity, days sales outstanding — each ratio tells a specific story about a specific aspect of financial health. Calculating them is arithmetic. Interpreting them requires context: industry benchmarks, historical trends, and peer comparisons.

The ratio analysis prompt: "Calculate the following ratios from the extracted financial data: [ratio list with formulas]. For each ratio, provide: the calculated value, the year-over-year change, the industry benchmark (if known), and a one-sentence interpretation. Flag any ratio that is more than one standard deviation from the industry benchmark or that changed by more than 20% year-over-year." The flag instruction is the quality gate — it directs Claude to highlight the ratios that need investigation rather than burying them in a table of 20 unremarkable numbers.

## Ratio Analysis Template

| Ratio | Formula | Current | Prior | YoY Change | Benchmark | Flag |
|-------|---------|---------|-------|------------|-----------|------|
| Gross Margin | GP / Revenue | | | | | |
| Operating Margin | OpInc / Revenue | | | | | |
| Net Margin | NI / Revenue | | | | | |
| Current Ratio | CA / CL | | | | | |
| Quick Ratio | (CA - Inv) / CL | | | | | |
| D/E Ratio | Total Debt / Equity | | | | | |
| DSO | (AR / Revenue) × 365 | | | | | |
| ROE | NI / Avg Equity | | | | | |

**Flag Criteria:** >20% YoY change OR >1 std dev from benchmark