Normalizing Financial Statements

Normalizing Financial Statements

When to use this skill

• When data comes from mixed sources and needs a single schema.
• When the user asks for multi-year trend analysis.
• When valuation or screening depends on comparable line items.

Workflow

1. Plan

• Define required periods (TTM, FY, quarterly history).
• Define mandatory fields for income statement, balance sheet, and cash flow.

2. Validate

• Confirm units/currency for each source.
• Confirm period alignment (fiscal year vs calendar year).
• Confirm sign conventions (for example, capex usually reported as negative cash flow).

3. Execute

• Map source line items to canonical fields.
• Adjust one-time items if explicitly requested.
• Output normalized table plus transformation notes.

Instructions

• Use a canonical schema with stable keys.
• Keep original value and normalized value traceable.
• Do not silently fill missing values; use null and explain.
• Distinguish reported metrics from adjusted metrics.

Canonical fields (minimum)

• Revenue
• GrossProfit
• OperatingIncome
• NetIncome
• EBITDA (if available)
• OperatingCashFlow
• Capex
• FreeCashFlow
• CashAndEquivalents
• TotalDebt
• SharesOutstanding

Validation checklist

• All periods use consistent units/currency
• Fiscal periods aligned
• Accounting identities checked (basic reasonableness)
• Missing fields documented
• Adjustments explicitly labeled

Output template

## Normalized Financials: <Company>

### Dataset Scope
- Periods: <...>
- Currency: <...>
- Unit: <...>

### Normalized Table
| Field | Period | Reported | Normalized | Notes |
|---|---:|---:|---:|---|
| Revenue | FY2025 | ... | ... | ... |

### Data Gaps
- <gap 1>

### Transform Notes
- <mapping or adjustment note>

Error handling

• If units are unknown, stop and request clarification before ratio outputs.
• If a key field is missing, continue with partial model and mark confidence as reduced.
• If period mapping is ambiguous, return multiple candidate mappings and ask user to choose.

Resources

• Filing extraction outputs from parsing-sec-filings