Financial Modeling Workflow

This skill provides a structured workflow for building financial models using the financial-modeler agent.

Workflow Overview

The financial modeling workflow follows 6 phases:

Phase	Name	Description
1	Scoping	Define model purpose and requirements
2	Architecture	Design model structure
3	Assumptions	Document all model inputs
4	Build	Construct model with formulas
5	Validation	Test and verify model
6	Documentation	Prepare user guide and audit trail

---

Phase 1: Scoping

MANDATORY: Define model purpose before building

Questions to Answer

Question	Purpose
What decision does this model support?	Ensures relevance
What type of model is needed?	Sets approach
What level of detail is required?	Scopes complexity
Who will use the model?	Tailors design
What scenarios are needed?	Plans flexibility

Model Type Selection

Type	Use Case	Key Outputs
DCF	Intrinsic valuation	Enterprise Value, Equity Value
Trading Comps	Relative valuation	Implied multiples
LBO	PE acquisition	IRR, MOIC, sources/uses
M&A	Strategic acquisition	Accretion/dilution, synergies
Three-Statement	Operating projections	IS, BS, CF integrated

Blocker Check

If ANY of these are unclear, STOP and ask:

• Model purpose
• Model type
• Key assumptions (WACC, growth, multiples)
• Scenario requirements

---

Phase 2: Architecture

MANDATORY: Design structure before building

Architecture Principles

Principle	Description
Input separation	All inputs in dedicated section
No hardcoding	No numbers in formulas
Consistent formulas	Same formula across row
Error checks	Validation on each sheet
Clear flow	Logical left-to-right, top-to-bottom

Standard Model Structure

Section	Contents
Cover	Model name, version, date, author
Inputs	All assumptions in one place
Historical	Historical financial data
Projections	Projected financials
Valuation	DCF, comps, or transaction calcs
Sensitivity	Sensitivity tables
Output	Summary and key metrics
Checks	Error checking

---

Phase 3: Assumptions

MANDATORY: Document ALL assumptions with sources

Required Assumption Categories

Category	Examples
Operating	Revenue growth, margins, CapEx
Valuation	WACC, terminal growth, multiples
Transaction	Entry price, financing, fees
Timing	Projection period, exit year

Assumption Documentation Standard

Element	Requirement
Assumption name	Clear description
Value	Base case value
Source	Where value came from
Sensitivity	Range for testing

Blocker: WACC Components

MUST get user input on:

• Risk-free rate source
• Equity risk premium source
• Beta source and adjustment
• Capital structure assumption

---

Phase 4: Build

Dispatch to specialist with full context

Agent Dispatch

Task tool:
  subagent_type: "financial-modeler"
  model: "opus"
  prompt: |
    Build financial model per these specifications:

    **Purpose**: [decision supported]
    **Model Type**: [DCF/LBO/M&A/Operating]

    **Architecture**:
    [From Phase 2]

    **Assumptions**:
    [From Phase 3]

    **Historical Data**:
    [Attach historical financials]

    **Required Output**:
    - Model structure per architecture
    - All assumptions in input section
    - Sensitivity analysis
    - Scenario analysis (base/upside/downside)
    - Error checks

Required Output Elements

Element	Requirement
Model Summary	Key outputs and conclusions
Assumptions	Complete input section
Model Structure	Per architecture design
Key Outputs	Valuation, metrics, returns
Sensitivity	2x2 tables for key drivers
Validation	Error checks passing

---

Phase 5: Validation

MANDATORY: Test model before delivery

Validation Tests

Test	Description
Balance Sheet	Assets = Liabilities + Equity
Cash Flow	CF reconciles to B/S cash
Circular Control	Circulars iterate and converge
Formula Audit	No hardcoded values in calcs
Reasonableness	Results within expected range

Sensitivity Testing

Test	Purpose
WACC sensitivity	Valuation impact of discount rate
Growth sensitivity	Valuation impact of growth
Margin sensitivity	Valuation impact of profitability
Exit multiple sensitivity	LBO return sensitivity

Anti-Rationalization

Rationalization	Why It's WRONG	Required Action
"Model foots, it's correct"	Footing ≠ correct logic	VALIDATE methodology
"Sensitivity shows expected range"	Range needs to be appropriate	VERIFY ranges sensible
"Used industry WACC"	WACC must be calculated	CALCULATE and document

---

Phase 6: Documentation

MANDATORY: Document for future users

Documentation Checklist

Element	Status
Model summary	Required
Assumption register	Required
Methodology description	Required
User instructions	Required
Error check explanations	Required
Version history	Required

Output Format

See shared-patterns/execution-report.md for base metrics.

Modeling-Specific Metrics:

• model_tabs: N
• assumptions_documented: N
• scenarios: N
• sensitivity_tests: N
• validation_tests: N passed

---

Pressure Resistance

See shared-patterns/pressure-resistance.md for universal pressures.

Modeling-Specific Pressures

Pressure Type	Request	Agent Response
"Just give me a valuation"	"Valuations require documented methodology. I'll build proper model."
"Use 10% WACC"	"WACC must be calculated from components. I'll show the build-up."
"Skip sensitivity"	"Sensitivity is required for decision support. I'll include key drivers."
"Copy last model"	"Each model needs fresh design. Prior models are reference, not template."

---

Anti-Rationalization Table

See shared-patterns/anti-rationalization.md for universal anti-rationalizations.

Modeling-Specific Anti-Rationalizations

Rationalization	Why It's WRONG	Required Action
"Quick model doesn't need structure"	ALL models need structure	DESIGN architecture
"Terminal value is just a plug"	TV often 60%+ of value	CALCULATE properly
"Industry multiple is obvious"	Multiples need source	CITE and date source
"Circular doesn't matter"	Circulars affect results	HANDLE explicitly

---

Execution Report

Upon completion, report:

Metric	Value
Duration	Xm Ys
Model Tabs	N
Assumptions	N documented
Scenarios	N
Sensitivity Tests	N
Validation Tests	N/N passed
Result	COMPLETE/PARTIAL

Quality Indicators

Indicator	Status
All inputs in input section	YES/NO
No hardcoded values	YES/NO
Error checks pass	YES/NO
Sensitivity included	YES/NO
Methodology documented	YES/NO