How to Analyze Financial Statements with ChatGPT Code Interpreter

open AI just released a new feature in chat GPT called code interpreter now in this video I'm going to show you how you can use this and in short what it does is it enables anyone to be a analyst a financial analyst a data analyst so if you are a financial analyst a bookkeeper a tax planner a any kind of tax Pro an accountant a CPA stick around because I'm going to go through about a dozen different examples of how you can actually use this tool no experience necessary no experience needed basically if you can use chat gbt you can actually use this so we're going to go through a few examples and I'm going to show you how powerful this tool is okay so I'm going to go ahead and share my screen and it kind of starts on Twitter I actually did this I lost sleep this weekend during this long Twitter thread on it so basically the I the idea here is that so they release new feature called code interpreter here okay and once you enable it you're able to do some really cool things so just to kind of go through a few quick examples here uh first thing is segment your customer in seconds okay so basically you know it takes a spreadsheet and then comes up with different segments of Music markets on its own right so you can take up you can basically upload any spreadsheet and what used to take maybe between one to three hours uh chat topt4 with code interpreter does it in about 10 seconds okay so imagine segmenting all your customers uh based on a uh just a document that you that you upload it so it can take any document you know PDFs Excel files CSV files docs you just upload it and it goes to town so I'm going to show you a little later we're going to go through the in-depth example um another one upload any invoice and extract all the info right so maybe a bookkeeper is gonna you know spend some time going through all these different uh you know categories of the invoice and all these transactions well uh this you can do this in just seconds with gpt4 um another example is find Bitcoin find bitcoin price seasonal changes right so it takes analysts maybe 30 minutes to one hour gbt4 takes about seven seconds to get a comprehensive analysis on seasonal changes with Bitcoin prices another example linear regression analysis right you can say hey yo code interpreter run linear regression on my data set and uh no need to uh you know do any kind of calculations on your own it just does the work for you it takes a financial analyst maybe two to three point five hours to do something like this uh in gpt4 it takes 6.5 seconds um another one visualized Trends from an uploaded CSV file right so you can visualize Trends here um I'm just going to go through a couple more of these uh video editing right so you can actually edit videos using this new feature and you can take the image and make it into actual MP4 movie uh this is pretty cool uh graph any public data right so you can grab information like in this case uh public data from the IMF you can visualize it uh you take a data analyst about an hour or so to do it you can do this in about 12 seconds with the GPT the new gpt4 feature uh you can do uh radar charts for example of your music on this example said hey you know your code code interpreter analyze my 300 hour Spotify playlist um who knows how long this would actually take a data analyst and in this case it can do this in about 14 seconds with gpt4 uh it can do cohort chart analysis it can do things like analyze real estate properties in any City and find the best deals so for example I say hey yo code interval and you can literally talk to it like this by the way and I'll show you a little later here's a file of 11 833 properties in Tallahassee which one's the best deal and why so it'll take a real estate Pro like weeks actually do this kind of analysis where it takes about 14 seconds for a code interpreter okay um plot mathematical functions so you don't have to be a math quiz or no statistics to do this kind of uh you know chart um clean any data right so for example another real estate listings example you can just upload your spreadsheet and instead of taking hours it can parse this information in about eight seconds to kind of see you know get the juicy parts of real estate uh information out of this uh and then the last one here is you can analyze your your financial statements right so income statement cash flow statement balance sheet I'm going to actually show you this one right now because I am going to go into detail on how I'm going to take my information and go through this so you can see how to do this yourself but like I said this is pretty much uh the code interpreter you know dozens of use cases uh so definitely check it out it's under uh the chatgpt plus Edition uh it's a 20 a month Edition it's just it's it's totally worth it so now what we're going to do is I'm going to hop on over and we are going to use chat TPT to go ahead and dig into this data so the first thing I want to show you is let's go here to my next screen so so this is chat gpt4 and what we're looking at here we're just basically uh the first thing we need to do is make sure that the code interpreter is enabled right so I'm going to go under my account and make sure that the settings are on for uh go under this and then to Beta features and now I'm going to enable something called code interpreter okay so once this that's on I am good to go so let me just kind of zoom out a little bit here so we can kind of see the screen a little better and now so now that that is enabled let me just kind of close up this a little bit so now under gpt4 you'll see something called code interpreter beta okay so I'm going to click on this okay so now uh now I'm just I'm just doing this live no edit so uh sometimes it may mess up a little bit but let's see how far we can actually get through on this uh since this is a pretty new feature okay so I'm going to in this example like I said I'm going to give it some information I'm going to give it some financial statements uh we're gonna actually have it look at some key financial data so I'm going to give it income statement I'm going to give it the cash flow statement and I'm going to give it a balance sheet so I have these socks here the income statement the cash flow statement and the balance sheet so I'm going to take this export it as a CSV file and I'm going to feed it into uh chat gpt4 so once I am able to code interpreter um I'm going to actually set it up with a prompt because um I could just go ahead and upload it and ask it for a quick information but I want to set the context right so I I literally want it to be a financial analyst for me okay so I wrote a little up here to help me out with that so I'm going to go ahead and paste in the prompt and let's go ahead and okay so here it is you are financial analyst GPT an expert and financial analyst and strategic business advice analyze all three sheets in this financial dock for Acme Inc and provide high level simple to understand client-facing insights and recommendations be sure to include any concerns or not anomalies include any necessary charge or other visualizations to support your observations this information should all be in an easy to read report so it's just grabbing my sheet here so basically I clicked on the little plus and I uploaded the uh this this uh this spreadsheet so this is basically the same info here uh it can be Excel file it can be a CSV file so I basically took this and I'm uploading it here okay so now that it is uploaded I'm going to go ahead and click on send message and let's see what happens so it's it's doing all this in real time right so it's working in the background you see this little code interpreter thing uh if and it says it's already finished working now what goes on in the background is using a lot of code to parse this stuff I'm not going to get into technical detail but it uses python and a few other scripts you don't have to know anything about that okay so it's continuing to run in the background if we click on this little drop down you can kind of see what's going on in the background if you're really technical it'll tell you how it uses python to parse through all this stuff um beyond the scope of this video so okay let's see what it comes back with it says the Excel document contains financial data for Acme ink and three sheets income statement cash flow statement balance sheet let's analyze each of these sheets in turn starting with the income statement I will load the data perform an analysis and provide insights and recommendations okay so the income statement shows the revenue costs and profits for Acme Inc for the years 2020-2021 and 2022 the data includes Revenue okay so typical self Revenue cost goods sold gross profit distribution marketing Administration expenses okay um and then let's further analyze this data to draw meaningful insights it says it seems there was an issue with how I tried to access the data from the data frame I made the assumption that the roles of the data frame were indexed by the names of the financial metrics such as Revenue cost good so however it appears that this is not the case let's adjust the approach and try again so sometimes it will catch problems in your data or it will detect problems that it made earlier and automatically try to fix it you don't have to tell it to do so um often it'll actually try to do that itself now if we catch something that doesn't make sense we can actually ask it to go and try again but in this case it caught it for us which is pretty cool okay it says all right finish working the updated income statement data includes uh net profit gross margin addition additionally I calculated the year-over-year growth for each Financial metric this shows how each metric has changed from one year to the next here are some high level observations and insights based on the data okay so this is what we wanted Revenue growth Revenue has been grown consistently over the years which is a good sign it shows that the company sales are increasing cost management both the cost of goods sold and distribution expenses have increased over time this suggests the company's costs are rising as it grows however it's important to note that these costs have grown at a slower rate than Revenue which suggests that the company is managing its cost effectively okay net profit margin net profit and profit margin growth the net profit uh and profit margin have also increase over time this in case the company is becoming more profitable the increase increase in profit margins suggests the company is becoming more efficient in converting Revenue into profit and then lastly marketing Administration the marketing Administration costs have grown over time but at a slower rate than Revenue this suggests that the company is managing these costs effectively okay so based on these observations the company appears to be doing uh well financially demonstrating consistent growth and improving profitability okay so um let's see now let's visualize some of the trends to get a clearer picture apologies for the confusion it seems there was a mismatch in the dimensions of X and Y of the plot blah blah blah I'm not sure what it's talking about so it says I'll correct this and re-plot the graph so again another example of it correcting itself I'm not doing anything here I just literally uploaded it okay apologies for Fusion I made an error while indexing the data for the plot the slicing up okay so it's just it's very verbal you know it's kind of telling you its mistakes act so we can skip over this now what it did it actually generated a chart here so it says um the chart above displays the revenue net profit and profit margin for Acme Inc from 2020 to 2022 okay so it looks like it on the y-axis is the dollar amount and then on the x-axis is um is the actual year here okay so it's looking at Revenue increasing it's looking at the net profit and it's looking at the profit margin as well okay so key observations and both the revenue profit have been upward Trend indicating Acme is growing and becoming more profitable profit margin the profit margin now it's also been increasing over this period okay so these Trends are positive uh Acme is in good Financial Health now let's analyze the cash flow statement so we went through um the initial we went through the initial data here and now we're going to go down to the next for the cash flow statement uh it contains parentheses which is note negative values however these parentheses are causing an error error because they are not recognized as a valid numerical format I will replace the parentheses with a minus sign to represent negative values and then convert the data to numeric format okay so basically what it's saying in that cash flow statement you know I had these of course you know these represent the you know the parentheses represent a negative number but it's saying hey I don't really do it like that because here's the thing um this income statement cash flow statement and balance sheet is uh it's it's pretty clean right but um sometimes you can have it in really funky formats and code interpreter does a good job at trying to read it in machine language versus the stuff that we're used to looking at so this is one little example here so let's go back and said all right so it fixed that now it's showing here some key components So it's talking about operating cash flow represents cash generated from the company's regular business expenses so okay so it's basically summarizing that here are some keyboard observations about the cash flow the subtotal for the cash from operating activities have increased over the years suggests that acne operations are generating more cash over time okay um it gives me information about cash uh the investing cash flow Financial cash flow uh financing cash flow cash balance uh let's see if there's any other things that it found here uh okay I said the cash balance at the end of the year has decreased over the years indicating the company is spending more cash than it's generating this could be a concern if it continues as a company needs to maintain a sufficient cash balance to cover short-term liabilities and unexpected expenses okay so the company's cash flow management appears to be reasonable given that it's investing in business and paying dividends to a shareholder however the decrease in cash balance could be a concern if it continues the company may need to increase its cash inflows decreases cash outflows or both now let's visualize the cash inflows and outflows to get a clearer pictures uh apologies for the confusion it seems that made an error while indexing okay I made another error so sometimes it gets so long it it stops so you just can literally type in the word continue and it will pick up right from where it left off from so now what it's trying to do it should be visualizing the uh the cash flow here so let's see if it's actually going to do that for us so again you can see it's working in the background um this process usually takes you know up to about 10 uh 15 seconds or so so it looks like it's finished in this case and it's apologizing again I made an error trying to plot something I want to do this and correct it again okay so again it's you know it's parsing the data it's trying to find errors because it's processing processing a lot of stuff in the background um you know imagine trying to do that man you know looking through all these things making sure everything is lining up perfectly so this is what it aims to do I'm not saying it's perfect but it does a pretty darn good job okay so now it is um it says since we're looking at Cash influence outflows it might be more appropriate to use a line graph instead of a bar chart let's plot the cash flow using a line graph okay I think that makes sense but let's see what visual it actually gives us so okay so now it's going to plot the cache inflows and outflows from uh let's just see here okay so this chart displays to Cache inflows from operating activities and other expenses uh and other increases and outflows capital expenditure and dividends uh from 2020 to 2022 here okay so it gives us this in this format here um the operating okay so let's look at some of the key observations um increasing steadily indicating the operations are becoming more efficient at generating cash okay let's see if there's any gotchas here um the capital expenditure was high in 2020 dropped significantly in 2021 but rose again in 2022 this could indicate a reduction in investments in 2021 followed by increased investments in 2022. let's fact check that so if we are looking at our cash flow let's look under see the capital expenditure here okay so yeah so it rolls it's 51.99 here it decreased in 2021 and then it increased again in 2022 so that is correct okay so again you want to fact chest you know definitely don't deliver this uh as is you want to fact check everything um it talks about dividends increase and decrease okay so let's see um let's go to the next one so let's analyze the balance sheet Okay so talks about some key parts of the balance sheet and now it's going to analyze it so the updated balance sheet includes Uh current ratio this is calculated as the total current assets divided by the total current liabilities let's measure it's a measure of the company's ability to pay short-term liabilities okay so it basically tells us what these things are in different ratios here's some high-level observations and insights based on this data Asset Management the company's total assets have increased over the years which is a positive sign it shows the company is growing and investing however the rate of total assets is slowed down slightly in 2022 okay the company's total liabilities have also increased over the Year this could be a concern and indicates a company is taking on more debt however the growth rate of total liabilities has also slowed down in 2022 okay shows Equity current ratio debt to Inc debt to equity ratio has decreased okay and it's giving a little visualization of this as well so the chart above displays the total assets like total liabilities is shareholder equity uh for acne Inc and then finally the key observations here so it says based on the analysis so this is a summary of the income statement cash flow statement balance sheet Acme appears to be in good Financial Health the company is growing its revenue and net profit managing its costs effectively and investing in business is also paying dividends to shareholders and maintaining a sufficient current ratio okay and here are a few areas of concern the cash balance because it's been decreasing decreasing the current ratio has decreased as well and liabilities have been increasing over the years so recommendations improved cash flow management um improved current ratio and reduce liabilities okay let's ask it something else let's say um Let's do let's do acid tests on this so let's just I'm going to go ahead and just type in a new question here so now perform an acid test ratio and provide feedback on whether the business can cover its short-term liabilities okay so now it is going to process this and try to do a asset test ratio basically is trying to see uh how well it can actually this is racial to figure out how well it can actually cover those short-term liabilities that it has here so asset test ratio also known as the quick ratio is a measure of a company's ability to cover short-term liabilities with its most liquid assets okay okay so it gives the calculation on how it does that now it says for Acme the asset ratio for the years are approximately 1.79 1.64 and 1.51 respectively this means that for every dollar of current liabilities Acme has 1.79 1.64 and 1.51 of the most liquid current Assets in these years respectively while this is the the ratio is decreasing over these slightly over these years it's still above one this suggests that Acme would be able to cover short-term liabilities even if cannot sell those inventory with just a positive sign so basically the adjectives ratio you know generally over one is a good sign and these are well over one however Acme should maintain it or increase this ratio to ensure its short-term Financial stability okay let's look at another one so let's ask it um So based on this uh what else are there any Financial visualization any other Financial visualizations you can create that would be helpful in interpreting this data so it can do all kinds of charts and plots and you know just kind of like we saw on uh while waiting for that just kind of like we saw on Twitter you know it can do a lot of different analysis but it really boils down to the questions that you ask it okay so in this example it says okay so it shows us the acid test ratio over the years okay um that looks so it basically did a visualization on that um in addition to this let's visualize the year over year growth so it's going to do a year-over-year growth chart um and let's see to show how these metrics are growing or Shrink shrinking over time okay so it is plugging away at that and I think we're going to do one more uh because like I said this is this is it just released uh so we're just I'm literally testing the waters on this here okay so now it actually the charter glove the plate displays the year over year growth rate of the uh total assets liabilities and shareholders Equity um and this is basically like a single point here um what is up with this here this little funky growth rate let's see here I'm gonna see if I can regenerate this response to see if it maybe can plot it out if you don't like the answer it comes back with you can click on that regenerate response and it will literally try again sometimes you just have to do it a few times just to kind of you know get uh different information out of it okay so this looks a little better here uh it gives us the asset test ratio again it gives us the key observations again and now it's going to try the uh to visualize the debt to equity ratio so if you have uh specific ratios you want to see just you can just literally type it in there I'm just asking it for like different ideas um so in this case it gives us a debt to equity ratio here okay and then it gives us a few key observations on that okay well this is basically the code interpreter and how we actually used it um to look at the uh you know a lot of information here across um the you know the income statement the cash flow statement and the balance sheet so like I said uh it is a new feature I think over time it is going to get a lot more robust but I encourage you to try it you know you literally just click on the plus sign upload a document and it you know it actually goes to town so um this is basically code interpreter and show if you like this video you can see more of this stuff here at my new newsletter where it we basically I produce all this stuff and showing you how to build a profitable practice uh while boosting your productivity using Ai and I have a lot of other examples and tutorials that I go through in debt so definitely check it out it's at in front of ai.com so thanks much and I'll see you on the next video

Channel: Marc Howard

Views: 11,046

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Id: TRaQ04z78Tw

Length: 24min 32sec (1472 seconds)

Published: Mon Jul 10 2023