ChatGPT Financial Ratios & Company Health Analyser Prompt
Analyse a company's financial health using key ratios — profitability, liquidity, leverage, and efficiency.
Category
💰 Finance
Difficulty
Advanced
Models
3
Last Updated
2026-06-28
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📋 Prompt
You are a certified financial analyst (CFA) specialising in fundamental analysis.
DISCLAIMER: This is educational analysis only — not regulated investment advice. Consult a qualified financial adviser.
Company: [company name]
Industry: [industry — for sector-appropriate benchmarking]
Financial data: [paste key financial figures — revenue, profit, assets, liabilities, or describe the situation]
Analysis purpose: [analysis purpose — investment research/credit assessment/competitor benchmark/course assignment]
Task: Complete financial ratio analysis:
1. PROFITABILITY RATIOS:
- Gross margin = Gross profit / Revenue
- Operating margin = EBIT / Revenue
- Net margin = Net income / Revenue
- ROE = Net income / Shareholders equity
- ROA = Net income / Total assets
Interpretation: What these numbers mean for THIS company in THIS industry
2. LIQUIDITY RATIOS:
- Current ratio = Current assets / Current liabilities
- Quick ratio = (Current assets - Inventory) / Current liabilities
Interpretation: Can the company meet its short-term obligations?
3. LEVERAGE/SOLVENCY:
- Debt-to-equity = Total debt / Total equity
- Interest coverage = EBIT / Interest expense
Interpretation: How much financial risk is the company carrying?
4. EFFICIENCY RATIOS:
- Asset turnover = Revenue / Total assets
- Inventory days = Inventory / (COGS / 365)
Interpretation: How efficiently is the company using its assets?
5. SECTOR BENCHMARKS:
How these ratios compare to the industry average
6. RED FLAGS:
Any ratios that signal financial distress
7. OVERALL VERDICT:
Financial health rating (Strong/Good/Adequate/Concerning/Distressed) with reasoning
DISCLAIMER: This is educational analysis only — not regulated investment advice. Consult a qualified financial adviser.
Company: [company name]
Industry: [industry — for sector-appropriate benchmarking]
Financial data: [paste key financial figures — revenue, profit, assets, liabilities, or describe the situation]
Analysis purpose: [analysis purpose — investment research/credit assessment/competitor benchmark/course assignment]
Task: Complete financial ratio analysis:
1. PROFITABILITY RATIOS:
- Gross margin = Gross profit / Revenue
- Operating margin = EBIT / Revenue
- Net margin = Net income / Revenue
- ROE = Net income / Shareholders equity
- ROA = Net income / Total assets
Interpretation: What these numbers mean for THIS company in THIS industry
2. LIQUIDITY RATIOS:
- Current ratio = Current assets / Current liabilities
- Quick ratio = (Current assets - Inventory) / Current liabilities
Interpretation: Can the company meet its short-term obligations?
3. LEVERAGE/SOLVENCY:
- Debt-to-equity = Total debt / Total equity
- Interest coverage = EBIT / Interest expense
Interpretation: How much financial risk is the company carrying?
4. EFFICIENCY RATIOS:
- Asset turnover = Revenue / Total assets
- Inventory days = Inventory / (COGS / 365)
Interpretation: How efficiently is the company using its assets?
5. SECTOR BENCHMARKS:
How these ratios compare to the industry average
6. RED FLAGS:
Any ratios that signal financial distress
7. OVERALL VERDICT:
Financial health rating (Strong/Good/Adequate/Concerning/Distressed) with reasoning
FINANCIAL RATIO ANALYSIS: Hypothetical SaaS Co
DISCLAIMER: Educational — not regulated investment advice.
PROFITABILITY:
Gross Margin: £8M / £10M = 80% ✅ EXCELLENT
SaaS benchmark: 65–80%. This company is at the top of the range, indicating strong pricing power and efficient cloud infrastructure.
Operating Margin: £1M / £10M = 10% ✅ GOOD for this stage
SaaS benchmark: 5–20% for growth-stage. At £10M ARR, a 10% operating margin shows disciplined unit economics.
Net Margin: £0.8M / £10M = 8%
ROE: £0.8M / £3M = 26.7% ✅ STRONG
Indicates efficient use of shareholder capital.
LIQUIDITY:
Current Ratio: £3M / £1M = 3.0 ✅ COMFORTABLE
Benchmark: >1.5 is healthy. This company has more than adequate liquidity.
LEVERAGE:
Debt-to-Equity: £2M / £3M = 0.67 ✅ MANAGEABLE
Interest Coverage: £1M / £0.15M = 6.7× ✅ COMFORTABLE
The company can service its debt comfortably.
RED FLAGS: None identified in this dataset. Watch: if growth spending increases, operating margin compression is expected.
OVERALL VERDICT: STRONG
This is a financially healthy SaaS business with excellent gross margins, manageable debt, and positive operating cash generation at an early stage.
DISCLAIMER: Educational — not regulated investment advice.
PROFITABILITY:
Gross Margin: £8M / £10M = 80% ✅ EXCELLENT
SaaS benchmark: 65–80%. This company is at the top of the range, indicating strong pricing power and efficient cloud infrastructure.
Operating Margin: £1M / £10M = 10% ✅ GOOD for this stage
SaaS benchmark: 5–20% for growth-stage. At £10M ARR, a 10% operating margin shows disciplined unit economics.
Net Margin: £0.8M / £10M = 8%
ROE: £0.8M / £3M = 26.7% ✅ STRONG
Indicates efficient use of shareholder capital.
LIQUIDITY:
Current Ratio: £3M / £1M = 3.0 ✅ COMFORTABLE
Benchmark: >1.5 is healthy. This company has more than adequate liquidity.
LEVERAGE:
Debt-to-Equity: £2M / £3M = 0.67 ✅ MANAGEABLE
Interest Coverage: £1M / £0.15M = 6.7× ✅ COMFORTABLE
The company can service its debt comfortably.
RED FLAGS: None identified in this dataset. Watch: if growth spending increases, operating margin compression is expected.
OVERALL VERDICT: STRONG
This is a financially healthy SaaS business with excellent gross margins, manageable debt, and positive operating cash generation at an early stage.
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💡 Pro Tips
Best model for this prompt
Claude
Claude (Opus 4 / Sonnet 4)
Always compare ratios to the industry benchmark, not an absolute standard — a 5% net margin is concerning for a retailer and excellent for a law firm
Trend analysis matters as much as point-in-time ratios — a declining gross margin is more alarming than a low one if it's been consistent
Cash flow metrics often tell a different story than P&L metrics — a company can show accounting profit while burning cash
Free cash flow conversion (FCF / Net income) is often the most telling metric for assessing earnings quality
Benchmarking against the wrong industry — a grocery store and a software company have vastly different normal ratios
Analysing a single year in isolation — patterns over 3–5 years reveal far more than any single period
Treating accounting ratios as definitive — financial statements have discretion built in; ratios are indicators, not truth
Ignoring off-balance-sheet items — operating lease obligations, contingent liabilities, and pension deficits can significantly change the leverage picture
- What financial data do I need for this analysis?Minimum: Revenue, Gross profit, Operating income (EBIT), Net income, Current assets, Current liabilities, Total assets, Total debt/liabilities, Shareholders' equity. All available from a company's annual report (income statement + balance sheet).
- Where can I find this financial data?Public companies: Investor Relations page on their website, SEC EDGAR (US), Companies House (UK), or financial databases like Macrotrends, Wisesheets, or Stockanalysis.com. Private companies: credit bureau reports, pitch deck disclosures, or request from the company directly.
- Which model is best for financial analysis?Claude is strongest — it maintains numerical accuracy, follows complex calculation sequences, and provides appropriately cautious interpretation with relevant caveats. Always verify calculations independently; AI can make arithmetic errors.
- Are these ratios suitable for all industries?The ratio categories are universal, but the benchmarks vary enormously by industry. Asset-heavy industries (manufacturing, utilities) have lower ROA than asset-light (software, professional services). Always apply industry-specific benchmarks, not generic ones.