Task 1: Industry Economics & Strategy AssessmentObjective: E...

Prompt

Task 1: Industry Economics & Strategy AssessmentObjective: Establish the macroeconomic and strategic baseline for the firm before analyzing the numbers.LLM Instructions:Evaluate the economic characteristics of the industry using Porter's five forces framework: rivalry among existing firms, threat of entrants, threat of substitutes, buyer power, and supplier power. Conduct a value chain analysis to determine where value is added within the industry. Apply an economic attributes framework to assess demand, supply, manufacturing, marketing, and investing/financing dynamics. Identify the firm's specific corporate strategies (e.g., product differentiation vs. low-cost leadership, degree of integration, geographical and industry diversification) to evaluate its sustainable competitive advantage. Output to Rolling Context: A structural profile of the firm's moat, pricing power, and vulnerability to macroeconomic shocks.Task 2: 10-K Sentiment & Management Tone AnalysisObjective: Extract qualitative signals from management's narrative.LLM Instructions:Perform a targeted sentiment analysis on the Management Discussion and Analysis (MD&A) and the Notes to the Financial Statements.Identify shifts in management tone regarding forward-looking statements, capital allocation plans, and identified risk factors.Flag any linguistic obfuscation or overly complex explanations of poor performance.Output to Rolling Context: A qualitative risk/opportunity matrix to contextualize the upcoming financial data.Task 3: Accounting Quality Assessment & NormalizationObjective: Cleanse the data of aggressive accounting practices and standardize it to industry baselines.LLM Instructions:Assess accounting quality by separating accruals and cash flows. Calculate the Beneish (1999) multivariate model (M-Score) to identify the likelihood of financial statement manipulation. Identify specific events that affect earnings persistence, such as gains/losses from peripheral activities, restructuring charges, impairment losses, and changes in accounting estimates. Normalize the accounting policy by removing overly aggressive practices that inflate earnings and aligning the firm's accounting standards to its industry peers.Output to Rolling Context: Clean, normalized historical financial statements and an accounting quality score.Task 4: Profitability, Risk, and ROIC AnalysisObjective: Analyze the historical economic reality of the firm's operating power.LLM Instructions:Generate common-size financial statements and percentage change financial statements to highlight relative rates of growth and analyze trends across the balance sheet and income statement. Disaggregate Return on Assets (ROA) and Return on Common Shareholders' Equity (ROCE) to isolate the effects of profitability, efficiency, and leverage. Calculate Return on Invested Capital (ROIC) using the McKinsey Economic Value Added (EVA) method to produce an accurate account of operating income power.Assess short-term liquidity risk, long-term solvency risk, and calculate bankruptcy prediction models, such as the Altman Z-score. Output to Rolling Context: Core operating metrics, historical growth rates, and a quantified risk profile.Task 5: The 7-Step Financial Statement ForecastObjective: Project the firm's future financial statements based on the normalized historical data and strategic analysis.LLM Instructions: Execute the seven-step forecasting game plan: Project revenues based on industry demand and strategy. Project operating expenses. Project operating assets and liabilities on the balance sheet. Project financial leverage, financial assets, equity capital, and financial income/expense items. Project provisions for taxes, net income, dividends, share repurchases, and retained earnings. Balance the balance sheet. Project the implied statement of cash flows. Output to Rolling Context: A fully articulated, forecasted 3-statement model for the next 5–10 years.Task 6: Multi-Method Valuation ModelingObjective: Triangulate the intrinsic value of the firm using various distinct approaches.LLM Instructions:Construct a standard Discounted Cash Flow (DCF) model using the forecasted parameters, deriving the Weighted Average Cost of Capital (WACC) and a terminal value.Perform a valuation using the earnings-based residual income approach, focusing on the firm's ability to generate income in excess of the cost of capital. Perform a dividends-based valuation (if applicable to the firm's capital return policy). Reverse engineer the firm's current stock price to infer the growth and valuation assumptions the broader market is currently making. Output to Rolling Context: Intrinsic value estimates, implied market assumptions, and a sensitivity analysis of key drivers.Task 7: Executive Synthesis & SummarizationObjective: Produce the final institutional-grade research report.LLM Instructions:Consume the rolling context from Tasks 1 through 6.Provide a 1,000-word comprehensive summarization of the findings.Structure the report with an explicit investment thesis, target price range, evaluation of earnings sustainability, and critical risks to the thesis.