better-dsh 0.2.4-a → 0.2.4-b

package/docs/80_upstream-docs-and-skills/hermes-dev-skill/src/docs/user-guide/skills/optional/finance/finance-3-statement-model.md

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----
-title: "3 Statement Model — Build integrated IS/BS/CF financial workbooks in Excel"
-sidebar_label: "3 Statement Model"
-description: "Build integrated IS/BS/CF financial workbooks in Excel"
----
-
-{/* This page is auto-generated from the skill's SKILL.md by website/scripts/generate-skill-docs.py. Edit the source SKILL.md, not this page. */}
-
-# 3 Statement Model
-
-Build integrated IS/BS/CF financial workbooks in Excel.
-
-## Skill metadata
-
-| | |
-|---|---|
-| Source | Optional — install with `hermes skills install official/finance/3-statement-model` |
-| Path | `optional-skills/finance\3-statement-model` |
-| Version | `1.0.0` |
-| Author | Anthropic (adapted by Nous Research) |
-| License | Apache-2.0 |
-| Platforms | linux, macos, windows |
-| Tags | `finance`, `three-statement`, `income-statement`, `balance-sheet`, `cash-flow`, `excel`, `openpyxl`, `modeling` |
-| Related skills | [`excel-author`](/docs/user-guide/skills/optional/finance/finance-excel-author), [`pptx-author`](/docs/user-guide/skills/optional/finance/finance-pptx-author), [`dcf-model`](/docs/user-guide/skills/optional/finance/finance-dcf-model), [`lbo-model`](/docs/user-guide/skills/optional/finance/finance-lbo-model) |
-
-## Reference: full SKILL.md
-
-:::info
-The following is the complete skill definition that Hermes loads when this skill is triggered. This is what the agent sees as instructions when the skill is active.
-:::
-
-## Environment
-
-This skill assumes **headless openpyxl** — you are producing an .xlsx file on disk.
-Follow the `excel-author` skill's conventions for cell coloring, formulas, named ranges, and sensitivity tables.
-Recalculate before delivery: `python /path/to/excel-author/scripts/recalc.py ./out/model.xlsx`.
-
-# 3-Statement Financial Model Template Completion
-
-Complete and populate integrated financial model templates with proper linkages between Income Statement, Balance Sheet, and Cash Flow Statement.
-
-## ⚠️ CRITICAL PRINCIPLES — Read Before Populating Any Template
-
-**Formulas over hardcodes (non-negotiable):**
-- Every projection cell, roll-forward, linkage, and subtotal MUST be an Excel formula — never a pre-computed value
-- When using Python/openpyxl: write formula strings (`ws["D15"] = "=D14*(1+Assumptions!$B$5)"`), NOT computed results (`ws["D15"] = 12500`)
-- The ONLY cells that should contain hardcoded numbers are: (1) historical actuals, (2) assumption drivers in the Assumptions tab
-- If you find yourself computing a value in Python and writing the result to a cell — STOP. Write the formula instead.
-- Why: the model must flex when scenarios toggle or assumptions change. Hardcodes break every downstream integrity check silently.
-
-**Verify step-by-step with the user:**
-1. **After mapping the template** → show the user which tabs/sections you've identified and confirm before touching any cells
-2. **After populating historicals** → show the user the historical block and confirm values/periods match source data
-3. **After building IS projections** → run the subtotal checks, show the user the projected IS, confirm before moving to BS
-4. **After building BS** → show the user the balance check (Assets = L+E) for every period, confirm before moving to CF
-5. **After building CF** → show the user the cash tie-out (CF ending cash = BS cash), confirm before finalizing
-6. **Do NOT populate the entire model end-to-end and present it complete** — break at each statement, show the work, catch errors early
-
-## Formatting — Professional Blue/Grey Palette (Default unless template/user specifies otherwise)
-
-**Keep colors minimal.** Use only blues and greys for cell fills. Do NOT introduce greens, yellows, oranges, or multiple accent colors — a clean model uses restraint.
-
-| Element | Fill | Font |
-|---|---|---|
-| Section headers (IS / BS / CF titles) | Dark blue `#1F4E79` | White bold |
-| Column headers (FY2024A, FY2025E, etc.) | Light blue `#D9E1F2` | Black bold |
-| Input cells (historicals, assumption drivers) | Light grey `#F2F2F2` or white | Blue `#0000FF` |
-| Formula cells | White | Black |
-| Cross-tab links | White | Green `#008000` |
-| Check rows / key totals | Medium blue `#BDD7EE` | Black bold |
-
-**That's 3 blues + 1 grey + white.** If the template has its own color scheme, follow the template instead.
-
-Font color signals *what* a cell is (input/formula/link). Fill color signals *where* you are (header/data/check).
-
-## Model Structure
-
-### Identifying Template Tab Organization
-
-Templates vary in their tab naming conventions and organization. Before populating, review all tabs to understand the template's structure. Below are common tab names and their typical contents:
-
-| Common Tab Names | Contents to Look For |
-|------------------|----------------------|
-| IS, P&L, Income Statement | Income Statement |
-| BS, Balance Sheet | Balance Sheet |
-| CF, CFS, Cash Flow | Cash Flow Statement |
-| WC, Working Capital | Working Capital Schedule |
-| DA, D&A, Depreciation, PP&E | Depreciation & Amortization Schedule |
-| Debt, Debt Schedule | Debt Schedule |
-| NOL, Tax, DTA | Net Operating Loss Schedule |
-| Assumptions, Inputs, Drivers | Driver assumptions and inputs |
-| Checks, Audit, Validation | Error-checking dashboard |
-
-**Template Review Checklist**
-- Identify which tabs exist in the template (not all templates include every schedule)
-- Note any template-specific tabs not listed above
-- Understand tab dependencies (e.g., which schedules feed into the main statements)
-- Locate input cells vs. formula cells on each tab
-
-### Understanding Template Structure
-
-Before populating a template, familiarize yourself with its existing layout to ensure data is entered in the correct locations and formulas remain intact.
-
-**Identifying Row Structure**
-- Locate the model title at top of each tab
-- Identify section headers and their visual separation
-- Find the units row indicating $ millions, %, x, etc.
-- Note column headers distinguishing Actuals vs. Estimates periods
-- Confirm period labels (e.g., FY2024A, FY2025E)
-- Identify input cells vs. formula cells (typically distinguished by font color)
-
-**Identifying Column Structure**
-- Confirm line item labels in leftmost column
-- Verify historical years precede projection years
-- Note the visual border separating historical from projected periods
-- Check for consistent column order across all tabs
-
-**Working with Named Ranges**
-Templates often use named ranges for key inputs and outputs. Before entering data:
-- Review existing named ranges in the template (Formulas → Name Manager in Excel)
-- Common named ranges include: Revenue growth rates, cost percentages, key outputs (Net Income, EBITDA, Total Debt, Cash), scenario selector cell
-- Ensure inputs are entered in cells that feed into these named ranges
-
-### Projection Period
-- Templates typically project 5 years forward from last historical year
-- Verify historical (A) vs. projected (E) columns are clearly separated
-- Confirm columns use fiscal year notation (e.g., FY2024A, FY2025E)
-
-## Margin Analysis
-
-**Note: The following margin analysis should only be performed if prompted by the user or if the template explicitly requires it. If no prompt is given, skip this section.**
-
-Calculate and display profitability margins on the Income Statement (IS) tab to track operational efficiency and enable peer comparison.
-
-### Core Margins to Include
-
-| Margin | Formula | What It Measures |
-|--------|---------|------------------|
-| Gross Margin | Gross Profit / Revenue | Pricing power, production efficiency |
-| EBITDA Margin | EBITDA / Revenue | Core operating profitability |
-| EBIT Margin | EBIT / Revenue | Operating profitability after D&A |
-| Net Income Margin | Net Income / Revenue | Bottom-line profitability |
-
-### Income Statement Layout with Margins
-
-Display margin percentages directly below each profit line item:
-- Gross Margin % below Gross Profit
-- EBIT Margin % below EBIT
-- EBITDA Margin % below EBITDA
-- Net Income Margin % below Net Income
-
-## Credit Metrics
-
-**Note: The following Credit analysis should only be performed if prompted by the user or if the template explicitly requires it. If no prompt is given, skip this section.**
-
-Calculate and display credit/leverage metrics on the Balance Sheet (BS) tab to assess financial health, debt capacity, and covenant compliance.
-
-### Core Credit Metrics to Include
-
-| Metric | Formula | What It Measures |
-|--------|---------|------------------|
-| Total Debt / EBITDA | Total Debt / LTM EBITDA | Leverage multiple |
-| Net Debt / EBITDA | (Total Debt - Cash) / LTM EBITDA | Leverage net of cash |
-| Interest Coverage | EBITDA / Interest Expense | Ability to service debt |
-| Debt / Total Cap | Total Debt / (Total Debt + Equity) | Capital structure |
-| Debt / Equity | Total Debt / Total Equity | Financial leverage |
-| Current Ratio | Current Assets / Current Liabilities | Short-term liquidity |
-| Quick Ratio | (Current Assets - Inventory) / Current Liabilities | Immediate liquidity |
-
-### Credit Metric Hierarchy Checks
-
-Validate that Upside shows strongest credit profile:
-- Leverage: Upside < Base < Downside (lower is better)
-- Coverage: Upside > Base > Downside (higher is better)
-- Liquidity: Upside > Base > Downside (higher is better)
-
-### Covenant Compliance Tracking
-
-If debt covenants are known, add explicit compliance checks comparing actual metrics to covenant thresholds.
-
-## Scenario Analysis (Base / Upside / Downside)
-
-Use a scenario toggle (dropdown) in the Assumptions tab with CHOOSE or INDEX/MATCH formulas.
-
-| Scenario | Description |
-|----------|-------------|
-| Base Case | Management guidance or consensus estimates |
-| Upside Case | Above-guidance growth, margin expansion |
-| Downside Case | Below-trend growth, margin compression |
-
-**Key Drivers to Sensitize**: Revenue growth, Gross margin, SG&A %, DSO/DIO/DPO, CapEx %, Interest rate, Tax rate.
-
-**Scenario Audit Checks**: Toggle switches all statements, BS balances in all scenarios, Cash ties out, Hierarchy holds (Upside > Base > Downside for NI, EBITDA, FCF, margins).
-
-## SEC Filings Data Extraction
-
-If the template specifically requires pulling data from SEC filings (10-K, 10-Q), see [references/sec-filings.md](https://github.com/NousResearch/hermes-agent/blob/main/optional-skills/finance\3-statement-model/references/sec-filings.md) for detailed extraction guidance. This reference is only needed when populating templates with public company data from regulatory filings.
-
-## Completing Model Templates
-
-This section provides general guidance for completing any 3-statement financial model template while preserving existing formulas and ensuring data integrity.
-
-### Step 1: Analyze the Template Structure
-
-Before entering any data, thoroughly review the template to understand its architecture:
-
-**Identify Input vs. Formula Cells**
-- Look for visual cues (font color, cell shading) that distinguish input cells from formula cells
-- Common conventions: Blue font = inputs, Black font = formulas, Green font = links to other sheets
-- Use Excel's Trace Precedents/Dependents (Formulas → Trace Precedents) to understand cell relationships
-- Check for named ranges that may control key inputs (Formulas → Name Manager)
-
-**Map the Template's Flow**
-- Identify which tabs feed into others (e.g., Assumptions → IS → BS → CF)
-- Note any supporting schedules and their linkages to main statements
-- Document the template's specific line items and structure before populating
-
-### Step 2: Filling in Data Without Breaking Formulas
-
-**Golden Rules for Data Entry**
-
-| Rule | Description |
-|------|-------------|
-| Only edit input cells | Never overwrite cells containing formulas unless intentionally replacing the formula |
-| Preserve cell references | When copying data, use Paste Values (Ctrl+Shift+V) to avoid overwriting formulas with source formatting |
-| Match the template's units | Verify if template uses thousands, millions, or actual values before entering data |
-| Respect sign conventions | Follow the template's existing sign convention (e.g., expenses as positive or negative) |
-| Check for circular references | If the template uses iterative calculations, ensure Enable Iterative Calculation is turned on |
-
-**Safe Data Entry Process**
-1. Identify the exact cells designated for input (usually highlighted or labeled)
-2. Enter historical data first, then verify formulas are calculating correctly for those periods
-3. Enter assumption drivers that feed forecast calculations
-4. Review calculated outputs to confirm formulas are working as intended
-5. If a formula cell must be modified, document the original formula before making changes
-
-**Handling Pre-Built Formulas**
-- If formulas reference cells you haven't populated yet, expect temporary errors (#REF!, #DIV/0!) until all inputs are complete
-- When formulas produce unexpected results, trace precedents to identify missing or incorrect inputs
-- Never delete rows/columns without checking for formula dependencies across all tabs
-
-### Step 3: Validating Formulas
-
-**Formula Integrity Checks**
-
-Before relying on template outputs, validate that formulas are functioning correctly:
-
-| Check Type | Method |
-|------------|--------|
-| Trace precedents | Select a formula cell → Formulas → Trace Precedents to verify it references correct inputs |
-| Trace dependents | Verify key inputs flow to expected output cells |
-| Evaluate formula | Use Formulas → Evaluate Formula to step through complex calculations |
-| Check for hardcodes | Projection formulas should reference assumptions, not contain hardcoded values |
-| Test with known values | Input simple test values to verify formulas produce expected results |
-| Cross-tab consistency | Ensure the same formula logic applies across all projection periods |
-
-**Common Formula Issues to Watch For**
-- Mixed absolute/relative references causing incorrect results when copied across periods
-- Broken links to external files or deleted ranges (#REF! errors)
-- Division by zero in early periods before revenue ramps (#DIV/0! errors)
-- Circular reference warnings (may be intentional for interest calculations)
-- Inconsistent formulas across projection columns (use Ctrl+\ to find differences)
-
-**Validating Cross-Tab Linkages**
-- Confirm values that appear on multiple tabs are linked (not duplicated)
-- Verify schedule totals tie to corresponding line items on main statements
-- Check that period labels align across all tabs
-
-### Step 4: Quality Checks by Sheet
-
-Perform these validation checks on each sheet after populating the template:
-
-**Income Statement (IS) Quality Checks**
-- Revenue figures match source data for historical periods
-- All expense line items sum to reported totals
-- Subtotals (Gross Profit, EBIT, EBT, Net Income) calculate correctly
-- Tax calculation logic is appropriate (handles losses correctly)
-- Forecast drivers reference assumptions tab (no hardcodes)
-- Period-over-period changes are directionally reasonable
-
-**Balance Sheet (BS) Quality Checks**
-- Assets = Liabilities + Equity for every period (primary check)
-- Cash balance matches Cash Flow Statement ending cash
-- Working capital accounts tie to supporting schedules (if applicable)
-- Retained Earnings rolls forward correctly: Prior RE + Net Income - Dividends +/- Adjustments = Ending RE
-- Debt balances tie to debt schedule (if applicable)
-- All balance sheet items have appropriate signs (assets positive, most liabilities positive)
-
-**Cash Flow Statement (CF) Quality Checks**
-- Net Income at top of CFO matches Income Statement Net Income
-- Non-cash add-backs (D&A, SBC, etc.) tie to their source schedules/statements
-- Working capital changes have correct signs (increase in asset = use of cash = negative)
-- CapEx ties to PP&E schedule or fixed asset roll-forward
-- Financing activities tie to changes in debt and equity accounts on BS
-- Ending Cash matches Balance Sheet Cash
-- Beginning Cash equals prior period Ending Cash
-
-**Supporting Schedule Quality Checks**
-- Opening balances equal prior period closing balances
-- Roll-forward logic is complete (Beginning + Additions - Deductions = Ending)
-- Schedule totals tie to main statement line items
-- Assumptions used in calculations match Assumptions tab
-
-### Step 5: Cross-Statement Integrity Checks
-
-After validating individual sheets, confirm the three statements are properly integrated:
-
-| Check | Formula | Expected Result |
-|-------|---------|-----------------|
-| Balance Sheet Balance | Assets - Liabilities - Equity | = 0 |
-| Cash Tie-Out | CF Ending Cash - BS Cash | = 0 |
-| Net Income Link | IS Net Income - CF Starting Net Income | = 0 |
-| Retained Earnings | Prior RE + NI - Dividends - BS Ending RE | = 0 (adjust for SBC/other items as needed) |
-
-### Step 6: Final Review
-
-Before considering the model complete:
-- Toggle through all scenarios (if applicable) to verify checks pass in each case
-- Review all #REF!, #DIV/0!, #VALUE!, and #NAME? errors and resolve or document
-- Confirm all input cells have been populated (search for placeholder values)
-- Verify units are consistent across all tabs
-- Save a clean version before making any additional modifications
-
-## Model Validation and Audit
-
-This section consolidates all validation checks and audit procedures for completed templates.
-
-### Core Linkages (Must Always Hold)
-
-See [references/formulas.md](https://github.com/NousResearch/hermes-agent/blob/main/optional-skills/finance\3-statement-model/references/formulas.md) for all formula details.
-
-| Check | Formula | Expected Result |
-|-------|---------|-----------------|
-| Balance Sheet Balance | Assets - Liabilities - Equity | = 0 |
-| Cash Tie-Out | CF Ending Cash - BS Cash | = 0 |
-| Cash Monthly vs Annual | Closing Cash (Monthly) - Closing Cash (Annual) | = 0 |
-| Net Income Link | IS Net Income - CF Starting Net Income | = 0 |
-| Retained Earnings | Prior RE + NI + SBC - Dividends - BS Ending RE | = 0 |
-| Equity Financing | ΔCommon Stock/APIC (BS) - Equity Issuance (CFF) | = 0 |
-| Year 0 Equity | Equity Raised (Year 0) - Beginning Equity Capital (Year 1) | = 0 |
-
-### Sign Convention Reference
-
-| Statement | Item | Sign Convention |
-|-----------|------|-----------------|
-| CFO | D&A, SBC | Positive (add-back) |
-| CFO | ΔAR (increase) | Negative (use of cash) |
-| CFO | ΔAP (increase) | Positive (source of cash) |
-| CFI | CapEx | Negative |
-| CFF | Debt issuance | Positive |
-| CFF | Debt repayments | Negative |
-| CFF | Dividends | Negative |
-
-### Circular Reference Handling
-
-Interest expense creates circularity: Interest → Net Income → Cash → Debt Balance → Interest
-
-Enable iterative calculation in Excel: File → Options → Formulas → Enable iterative calculation. Set maximum iterations to 100, maximum change to 0.001. Add a circuit breaker toggle in Assumptions tab.
-
-### Check Categories
-
-**Section 1: Currency Consistency**
-- Currency identified and documented in Assumptions
-- All tabs use consistent currency symbol and scale
-- Units row matches model currency
-
-**Section 2: Balance Sheet Integrity**
-- Assets = Liabilities + Equity (for each period)
-- Formula: Assets - Liabilities - Equity (must = 0)
-
-**Section 3: Cash Flow Integrity**
-- Cash ties to BS (CF Ending Cash = BS Cash)
-- Cash Monthly vs Annual: Closing Cash (Monthly) = Closing Cash (Annual)
-- NI ties to IS (CF Net Income = IS Net Income)
-- D&A ties to schedule
-- SBC ties to IS
-- ΔAR, ΔInventory, ΔAP tie to WC schedule
-- CapEx ties to DA schedule
-
-**Section 4: Retained Earnings**
-- RE roll-forward check: Prior RE + NI + SBC - Dividends = Ending RE
-- Show component breakdown for debugging
-
-**Section 5: Working Capital**
-- AR, Inventory, AP tie to BS
-- DSO, DIO, DPO reasonability checks (flag if outside normal ranges)
-
-**Section 6: Debt Schedule**
-- Total Debt ties to BS (Current + LT Debt)
-- Interest calculation ties to IS
-
-**Section 6b: Equity Financing**
-- Equity issuance proceeds tie to BS Common Stock/APIC increase
-- Cash increase from equity = Equity account increase (must balance)
-- Equity Raise Tie-Out: ΔCommon Stock/APIC (BS) = Equity Issuance (CFF) (must = 0)
-- Year 0 Equity Tie-Out: Equity Raised (Year 0) = Beginning Equity Capital (Year 1)
-
-**Section 6c: NOL Schedule**
-- Beginning NOL (Year 1 / Formation) = 0 (new business starts with zero NOL)
-- NOL increases only when EBT < 0 (losses must be realized to generate NOL)
-- DTA ties to BS (NOL Schedule DTA = BS Deferred Tax Asset)
-- NOL utilization ≤ 80% of EBT (post-2017 federal limitation)
-- NOL balance is non-negative (cannot utilize more than available)
-- NOL generated only when EBT < 0
-- Tax expense = 0 when taxable income ≤ 0
-
-**Section 7: Scenario Hierarchy**
-- Absolute metrics: Upside > Base > Downside (NI, EBITDA, FCF)
-- Margins: Upside > Base > Downside (GM%, EBITDA%, NI%)
-- Credit metrics: Upside < Base < Downside for leverage (inverted)
-
-**Section 8: Formula Integrity**
-- COGS, S&M, G&A, R&D, SBC driven by % of Revenue (no hardcodes)
-- Consistent formulas across projection years
-- No #REF!, #DIV/0!, #VALUE! errors
-
-**Section 9: Credit Metric Thresholds**
-- Flag metrics as Green/Yellow/Red based on covenant thresholds
-- Summary of any red flags
-
-### Master Check Formula
-
-Aggregate all section statuses into a single master check:
-- If all sections pass → "✓ ALL CHECKS PASS"
-- If any section fails → "✗ ERRORS DETECTED - REVIEW BELOW"
-
-### Quick Debug Workflow
-
-When Master Status shows errors:
-1. Scroll to find red-highlighted sections
-2. Identify which check category has failures
-3. Navigate to source tab to investigate
-4. Fix the underlying issue
-5. Return to Checks tab to verify resolution
-
-
-## Data sources — MCP first, web fallback
-
-Many passages below say "use the S&P Kensho MCP / Daloopa MCP / FactSet MCP". Those are commercial financial-data MCPs from the original Cowork plugin context. In Hermes:
-
-- **If you have any structured financial-data MCP configured** (Hermes supports MCP — see `native-mcp` skill), prefer it for point-in-time comps, precedent transactions, and filings.
-- **Otherwise**, fall back to:
-  - `web_search` / `web_extract` against SEC EDGAR (`https://www.sec.gov/cgi-bin/browse-edgar`) for US filings
-  - Company IR pages for press releases, earnings decks
-  - `browser_navigate` for interactive data portals
-  - User-provided data (explicitly ask when the context doesn't have it)
-- **Never fabricate**. If a multiple, precedent, or filing number can't be sourced, flag the cell as `[UNSOURCED]` and surface it to the user.
-
-## Attribution
-
-This skill is adapted from Anthropic's Claude for Financial Services plugin suite (Apache-2.0). The Office-JS / Cowork live-Excel paths have been removed; this version targets headless openpyxl via the `excel-author` skill's conventions. Original: https://github.com/anthropics/financial-services