ChatGPT is an AI system developed by OpenAI that can understand natural language prompts and provide intelligent responses. It has enormous potential to enhance and automate various tasks in the financial industry through its ability to analyze data, generate insights, and communicate in human-like language.
Mastering the art of crafting effective ChatGPT prompts is key to unlocking its full potential for financial analysis. Proper prompt engineering allows finance professionals to tap into the knowledge and analytical capabilities of ChatGPT to solve problems, guide decision-making, and boost productivity.
This article provides prompt examples across various financial analysis use cases to help you get the most value out of ChatGPT.
Financial Statement Analysis
Financial statement analysis involves assessing a company’s performance by examining its financial reports. ChatGPT can help with ratio analysis, trend analysis, peer benchmarking, and more.
Prompt: Provide a comparative financial statement analysis for companies X and Y over the past 3 years focusing on liquidity, leverage, profitability, and efficiency ratios. Identify the key differences in their financial profile and performance.
ChatGPT Response: [Detailed financial analysis comparing the two companies' financial ratios over 3 years, highlighting the major differences and providing insights into reasons behind divergent financial profiles and performance] Forecasting and Modeling
ChatGPT can build financial models to forecast future performance. Its ability to rapidly process data makes it suitable for sensitivity analysis and scenario modeling.
Prompt: Build a 3-statement financial model for company X to forecast its performance over the next 5 years. Make base case assumptions and also create upside and downside scenarios.
ChatGPT Response: [Financial model with linked income statement, balance sheet, cash flow statement projections under different scenarios]Investment Analysis
ChatGPT can analyze investments like stocks, bonds, derivatives, and real assets to determine their expected risk, returns, and suitability.
Prompt: Analyze stock X and determine its value based on a DCF model. Use last 5 years financials and Wall Street growth forecasts to project future cash flows. Calculate cost of equity using CAPM.
ChatGPT Response: [Detailed stock analysis including DCF valuation and recommendation based on derived intrinsic value vs market price]Risk Management
ChatGPT can improve risk management processes in finance like credit risk, market risk, liquidity risk, and operational risk.
Prompt: Suggest techniques to measure and reduce counterparty credit risk for company X which frequently transacts derivatives like swaps and options.
ChatGPT Response: [Examples of credit risk metrics like PD, LGD, EAD and mitigation strategies like margin requirements, CSA agreements, diversification]Regulatory and Compliance
ChatGPT can enhance compliance in areas like financial reporting, auditing, taxes, and regulations.
Prompt: Outline the key controls company X should have in place to comply with SOX regulations around financial reporting and disclosures.
ChatGPT Response: [Description of relevant SOX controls related to financial reporting and accounting]Useful Websites:
- https://openai.com/blog/chatgpt/
- https://www.wallstreetmojo.com/financial-modeling/
- https://www.investopedia.com/articles/investing/093015/risk-management-finance.asp