![]() ![]() The following example is Chat GPT explaining the NPV and IRR formulas. Using Chat GPT as an Excel Formula Reference GuideĬhat GPT can easily give you Excel Formulas and does a much better job explaining them than the prompt or formula wizard will do. It may be quicker to use Chat GPT to setup the formulas as part of a more extensive Excel template. It seems to get confused when inputting tabular text and numbers into the chat prompt unless you are incredibly specific. You can also use Chat GPT for Financial Valuation Ratios like the Sortino or Sharpe Ratio, and for reminding you of how-to setup formulas that are less common such as the Black Scholls formula for options valuation.Īs a test, we tried to feed specific financial information into Chat GPT to have it calculate the ratios for us, which it can do in limited instances. It quickly returns a description of a ratio that you are interested in and describes in detail how to calculate it. From a Current Ratio, Quick Ratio, Acid Test Ratio, Defensive Interval Ratio, to various cals for CCC, DSO, DIO, DPO, DSI, and various burn rates it can tough to keep track of them all.Ĭhat GPT is useful as a reference for financial ratio calculations. The sheer volume of ratios that people have come up with over the years can be daunting to keep in your head. How to Use Chat GPT for Financial Ratio Analysisįinancial ratios are the bread and butter of financial analysis. As an example, we asked Chat GPT to explain the accounting treatment for gains and losses arising from a cash flow hedge, the exact wording was copied and paste from a publicly traded firms 10-k.Ĭhat GPT can also be an excellent resource to summarize and re-word the notes or disclosure sections of a 10-K or 10-Q. As accountants for publicly traded companies get more creative, it can be difficult to keep up. Most analysts are going to be familiar with the primary lines of an income statement or balance sheet. How to Use Chat GPT for Vertical Analysis It can even cite specific research sources. Microsoft’s Bing Search has up to date information that can be summarized and aggregated. At the direction of Satya Nadella, Microsoft has been aggressively integrating Chat GPT into most of their software. However, Microsoft recently invested over $10 Billion into OpenAI, the developers behind Chat GPT. The tool is only trained with data up until 2021. As a quick primer, you can use Chat GPT to summarize recent company history. ![]() There is a lot of contextual information that helps an analyst determine if the numbers that they are observing are telling the same story that management is. In an ideal world analysts would only have to cover industries that they are already familiar with. How to Use Chat GPT for Horizontal Analysis What Chat GPT can do is help an Analyst complete their daily job duties faster and with more context. It’s like that this feature will exist in some form of software in the future, but it is not available at the time of writing. Unfortunately, in its current form you are unable to load an entire 10-K into Chat GPT for analysis. How to Use Chat GPT for 3 types of Financial Analysis They review financial reports, and financial statements such as the income statement, balance sheet, and cash flow statement to evaluate a company’s profitability, and use the information to forecast their long-term growth potential, or to assign a valuation.įinancial Analysis is important as the data generated is used to inform investment decisions or assess liquidity or solvency conditions that are of interest to banks and other lenders. What is Financial Analysis and Why is it Important?įinancial Analysis is traditionally performed by a Financial Analyst. This means that there is some understanding of what a person is asking, and you can ask follow-up questions to have it provide greater detail, or to clarify and summarize information. The two key differentiators of this technology vs prior chat bots is that the answers have Contextual Awareness and it’s capable of Multi-Turn Conversations. The software has been trained on massive datasets and can answer many complex questions with surprising detail. ![]() ![]() What is Chat GPT?Ĭhat GPT (Generative Pre-trained Transformer) is a new language model that utilizes advanced machine learning and artificial intelligence to answer questions from people in the same manner that another person would answer it. NContinue reading to learn more about this exciting new technology and how to leverage in your job to stay ahead of the curve. New technologies such as Chat GPT promise to disrupt the way Analysts perform their job, while enabling them to also complete complex tasks that they may not have been able to previously. The world of Financial Analysis is changing fast. ![]()
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