--- name: financial-statement-generation description: Generates the three core financial statements — P&L (income statement), balance sheet, and cash flow statement — with proper formatting, classifications, and period-over-period comparisons. Use when the user mentions financial statement generation, producing a P&L, creating a balance sheet, formatting a cash flow statement, or asks about consolidated financials. version: 2.0.0 author: Crewm8 maintainer: Gokul (github.com/gokulb20) license: MIT homepage: https://crewm8.ai tags: [cfo, finance, financial-statements, profit-and-loss, balance-sheet, cash-flow] related_skills: [monthly-close-process, board-reporting, audit-preparation, cash-forecasting] inputs_required: [general-ledger-trial-balance-post-close, prior-period-financial-statements, chart-of-accounts-with-classification, revenue-recognition-schedule, fixed-asset-register, debt-amortization-schedules, equity-rollforward] deliverables: [profit-and-loss-statement, balance-sheet, cash-flow-statement, summary-kpi-dashboard, flagged-items-report] compatible_agents: [hermes, claude-code, droid, cursor, windsurf, openclaw, openai, generic] --- # Financial Statement Generation Produce the three core financial statements from the general ledger. Format them for management, board, and investor consumption. Goal: anyone can pick up these statements and understand the company's financial health in under 60 seconds. ## Purpose Financial statements are the primary communication tool for the company's financial health — used by the CEO for decisions, the board for oversight, investors for diligence, and auditors for assurance. This skill transforms a closed trial balance into clear, well-formatted statements with period-over-period comparisons and the KPIs that matter. Without this skill, raw data stays in the accounting system where nobody can act on it. ## When to Use - "Generate the P&L / income statement" - "Produce the balance sheet" - "Create a cash flow statement" - "Give me the financial statements for [period]" - "Format our financials for the board" - "Consolidated financial statements" ## Inputs Required - General ledger trial balance (balanced, post-month-end-close) - Prior period financial statements for comparison - Chart of accounts with proper departmental and functional classification - Revenue recognition schedule (deferred revenue rollforward) - Fixed asset register and depreciation schedule - Debt amortization schedules - Equity rollforward and cap table - Board/investor formatting preferences (KPIs to highlight) ## Quick Reference | Statement | What It Shows | Key Check | |-----------|---------------|-----------| | P&L (Income Statement) | Revenue, costs, and profit over a period | Include % of revenue and prior period comparison | | Balance Sheet | Assets, liabilities, and equity at a point in time | Assets = Liabilities + Equity | | Cash Flow Statement | Sources and uses of cash over a period | Ending cash = balance sheet cash | | EBITDA | Operating Income + Depreciation + Amortization | Proxy for operating cash flow | | Net Burn | Net Income (if negative) | Cash consumption rate | ## Procedure 1. Complete the monthly close (`monthly-close-process`). 2. Generate the P&L from the income statement accounts. 3. Calculate the balance sheet from the ending trial balance. 4. Derive the cash flow statement (P&L + BS changes = CF). 5. Verify: ending cash on CF = cash on BS. 6. Add period-over-period comparisons and % calculations. 7. Add KPI summary at the top (revenue, gross margin, EBITDA, net income, cash, burn). ### 1. Income Statement (P&L) Format: monthly or quarterly columns, with % of revenue where useful. ``` [Company Name] Income Statement For the [Month/Quarter/Year] Ended [Date] (USD, Accrual Basis) Current Month % of Rev Prior Month % of Rev YoY (Same Month) ───────────────────────────────────────────────────────────────────────────────────────────────────────────── REVENUE Subscription Revenue $380,000 88% $350,000 89% $210,000 Professional Services $50,000 12% $45,000 11% $30,000 TOTAL REVENUE $430,000 100% $395,000 100% $240,000 COST OF REVENUE Hosting & Infrastructure $38,000 9% $35,000 9% $22,000 Payment Processing Fees $12,900 3% $11,850 3% $7,200 Customer Support $25,000 6% $24,000 6% $18,000 TOTAL COST OF REVENUE $75,900 18% $70,850 18% $47,200 GROSS PROFIT $354,100 82% $324,150 82% $192,800 OPERATING EXPENSES Research & Development Engineering Salaries $145,000 34% $140,000 35% $95,000 Cloud Infrastructure (Dev) $22,000 5% $20,000 5% $14,000 Engineering Tools $8,000 2% $7,500 2% $5,000 Total R&D $175,000 41% $167,500 43% $114,000 Sales & Marketing Sales Salaries + Commissions $82,000 19% $78,000 20% $52,000 Marketing Salaries $38,000 9% $37,000 9% $25,000 Advertising & Promotion $25,000 6% $20,000 5% $8,000 Total S&M $145,000 34% $135,000 34% $85,000 General & Administrative Executive Salaries $45,000 10% $44,000 11% $30,000 Finance & Accounting $8,000 2% $7,500 2% $5,000 Legal $12,000 3% $500 0% $3,000 Office & Facilities $6,000 1% $6,000 2% $4,000 Insurance $4,000 1% $4,000 1% $2,000 Other G&A $5,000 1% $4,000 1% $3,000 Total G&A $80,000 19% $66,000 17% $47,000 TOTAL OPERATING EXPENSES $400,000 93% $368,500 94% $246,000 OPERATING INCOME (LOSS) ($45,900) −11% ($44,350) −11% ($53,200) OTHER INCOME / EXPENSE Interest Income $8,500 2% $8,200 2% $1,200 Interest Expense ($3,000) −1% ($3,000) −1% $0 Other ($200) 0% $0 0% $0 NET INCOME (LOSS) ($40,600) −9% ($39,150) −10% ($52,000) ``` Key metrics below the P&L: - EBITDA = Operating Income + Depreciation + Amortization - Net Burn = Net Income (if negative) - Gross Burn = Total Operating Expenses + COGS (excluding revenue-linked costs) ### 2. Balance Sheet ``` [Company Name] Balance Sheet As of [Date] (USD) ASSETS Current Prior Month-End ──────────────────────────────────────────────────────────────────────────────────────── CURRENT ASSETS Cash & Cash Equivalents $2,847,000 $2,861,200 Accounts Receivable (net) $245,000 $230,000 Prepaid Expenses $48,000 $44,000 Other Current Assets $6,500 $6,500 TOTAL CURRENT ASSETS $3,146,500 $3,141,700 NON-CURRENT ASSETS Property & Equipment (net) $65,000 $67,000 Security Deposits $15,000 $15,000 Other Assets $0 $0 TOTAL NON-CURRENT ASSETS $80,000 $82,000 TOTAL ASSETS $3,226,500 $3,223,700 LIABILITIES & EQUITY ──────────────────────────────────────────────────────────────────────────────────────── CURRENT LIABILITIES Accounts Payable $68,000 $72,000 Accrued Expenses $42,000 $38,000 Payroll Tax Payable $18,500 $17,200 Deferred Revenue (current) $185,000 $192,000 Credit Cards Payable $12,000 $15,000 TOTAL CURRENT LIABILITIES $325,500 $334,200 LONG-TERM LIABILITIES Convertible Notes $500,000 $500,000 Venture Debt $250,000 $250,000 Deferred Revenue (long-term) $80,000 $85,000 TOTAL LONG-TERM LIABILITIES $830,000 $835,000 TOTAL LIABILITIES $1,155,500 $1,169,200 EQUITY Common Stock $1,000 $1,000 Preferred Stock $500,000 $500,000 Additional Paid-In Capital $4,500,000 $4,500,000 SAFE Instruments (equity-classified) $300,000 $300,000 Accumulated Deficit ($3,230,000) ($3,246,500) TOTAL EQUITY $2,071,000 $2,054,500 TOTAL LIABILITIES & EQUITY $3,226,500 $3,223,700 Check: Assets = Liabilities + Equity ✓ ``` ### 3. Cash Flow Statement Use the **indirect method** (start from net income, adjust for non-cash items): ``` [Company Name] Statement of Cash Flows For the [Period] Ended [Date] (USD) CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) ($40,600) Adjustments to reconcile net income: Depreciation & Amortization $3,500 Bad Debt Expense $1,200 Non-cash Interest (SAFE/Note accretion) $1,500 Changes in working capital: (Increase) / Decrease in AR ($15,000) (Increase) / Decrease in Prepaid ($4,000) Increase / (Decrease) in AP ($4,000) Increase / (Decrease) in Accrued Expenses $4,000 Increase / (Decrease) in Deferred Revenue ($12,000) Increase / (Decrease) in Payroll Tax Payable $1,300 NET CASH PROVIDED BY (USED IN) OPERATING ($64,100) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Equipment ($1,500) NET CASH USED IN INVESTING ($1,500) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Stock Option Exercises $16,500 SAFE Issuance Proceeds $0 Repayment of Venture Debt ($5,000) NET CASH PROVIDED BY FINANCING $11,500 NET CHANGE IN CASH ($54,100) Cash at Beginning of Period $2,861,200 Cash at End of Period $2,807,100 SUPPLEMENTAL DISCLOSURES: Interest Paid $3,000 Income Taxes Paid $0 ``` ## Output Format - P&L (current period + prior period + YoY comparison) - Balance sheet (current + prior period-end) - Cash flow statement - Summary KPI dashboard - Flagged items: unusual balances, large swings, negative accounts ## Done Criteria The skill is complete when: 1. All three statements (P&L, Balance Sheet, Cash Flow) are generated from a closed trial balance. 2. Period-over-period comparisons (prior month, YoY) are included with variance percentages. 3. % of revenue is shown on the P&L for every line item. 4. Ending cash on the cash flow statement ties to cash on the balance sheet. 5. KPI summary (revenue, gross margin, EBITDA, net income, cash, burn) is included. 6. Any unusual items are flagged for review. ## Pitfalls - **Generating statements before the close is complete**: drafting financials from an unreconciled trial balance means the numbers will change. Wait until the close checklist is signed off. - **Omitting % of revenue from the P&L**: raw dollar amounts without ratio context mislead readers. A $50k legal line item at $5M revenue vs $500k revenue tells entirely different stories. - **Using different classification logic across periods**: moving expenses between departments or between COGS and OpEx without restating prior periods destroys comparability. - **Forgetting to verify the cash flow ties to the balance sheet**: a cash flow statement whose ending cash doesn't match the balance sheet is invalid. This is the single most common error in manual preparation. - **Presenting non-GAAP metrics without reconciliation**: if you show EBITDA or Adjusted Revenue, always include a reconciliation back to GAAP net income. Skipping this invites auditor questions and investor skepticism. ### Heuristics - **Always include % of revenue on the P&L**: context is everything. $100k in legal spend means something very different at $500k revenue vs $5M revenue. - **Always include prior period comparisons**: a single month in isolation is useless. - **Cash flow statement is the truth-teller**: a company with great P&L but terrible cash flow is in trouble. The cash flow statement reveals it. - **Balance sheet must balance**: sounds obvious, but this is the #1 error in manually prepared statements. - **Accrual basis, always**: cash-basis statements have their place, but label them clearly as such. ### Edge Cases - **Consolidated statements** (parent + subsidiaries): eliminate intercompany transactions and balances. - **Multi-currency**: translate foreign subs at the period-end rate for BS, average rate for P&L. Put FX translation adjustments in Other Comprehensive Income. - **Comparative periods for new companies**: if the company is < 12 months old, just show "since inception" or monthly from month 1. ## Verification Does the cash flow statement's ending cash balance match the balance sheet? Does every line on the P&L have a % of revenue? Can someone pick up this package and understand the company's financial health in under 60 seconds? If not, the statements need more work. ## Example 1. "Generate the quarterly financial statements for Q1 2026 — P&L, balance sheet, and cash flow statement with YoY comparisons." 2. "We have two subsidiaries in different currencies. Produce consolidated financial statements with proper FX translation." 3. "Format our financials for the board deck — include % of revenue, prior quarter comparisons, and a KPI summary at the top." ## Linked Skills - Close the books first → `monthly-close-process` - Format for board → `board-reporting` - Audit support → `audit-preparation` - Cash forecast tie-in → `cash-forecasting`