GPT-4 can do Financial Statement Analysis!!!

Key Takeaways

can you use chat GPT or gpt4 to do financial statement analysis yes you can do it and I just try to do financial statement analysis of svb Silicon Valley Bank that was a huge crisis couple of weeks back I wanted to ask GPT 4 if I provide this balance sheet and ask it to assess the risk of svb Silicon Valley Bank whether it will do it's not my completely new idea I came across this interesting blog post where somebody claimed that gpt4 could find the Silicon Valley Banks insolvency issue using the 2011 balance sheet data but I didn't want to believe this so I wanted to try it out myself so I'm going to show you the steps until how it can detect something from balance sheet the first thing that I did is I went to Yahoo and then I got the balance sheet it's quite simple straightforward go copy the balance sheet after you copy the balance sheet go to chat GPT and if you have got gpt4 access it's well and good I'm going to start a new chart so that you know that I'm starting everything from scratch first thing you need to do is go click gpt4 your messages are capped 24 so make sure that you send the right messages I'm going to paste the balance sheet and I'm going to say here is a balance sheet of a bank that's the first information the second information I'm going to copy from this blog post which actually asks gpt4 to calculate certain things now to copy the exact exact thing and I'm going to go back to my GPT for instance and I'm going to paste it I'm going to say please assess the following risks as it pertains to this bank's Financial solvency providing an impact likelihood and RAC score for each please use a five point scale for both impact and likelihood price inflation as measured by the CPI interest rate risk economic recession price change in the housing market pandemic war and natural disaster a run on the bank based on the computed RAC score identify the one risk that poses the most significant threat to banks financial solvency and if you want additionally we can ask further follow-up question now send this message to gpt4 and let's see what gpt4 is going to do whether it is going to blow your mind I'm not sure but if you are a financial expert which I am not I don't have a lot of information about Banks and financial data if you are watching this video and you are a financial expert I want you to look at this and then tell me if it is pure fluff is it hallucination or is actually gpd4 doing a great job of being a financial analysis financial analyst looking at the balance sheet and trying to actually predict or trying to actually say that Silicon Valley Banks balance sheet could be an indicator that it can have insolvency issue so it's calculating as you can see it has already calculated the first one which is price inflation as measured by the CPI and the impact is 3 likelihood is three our AC score is 9 which means in however the banks can inflation can affect the values value of assets and liabilities impacting the bank's overall Financial Health however Banks can generally manage inflation risk through various investment strategies good internet interest rate risk impact 4 likelihood 4 and interest rate fluctuations directly impact the bank's net interest income asset values and liability costs a significant change in interest rate could lead to reduced profitability and affect Bank solvency then you have economic recession RAC score is 15 then you have price change in the housing market RSC score is 12 pandemic war and natural disaster RSC score is 10 run on the bank RAC score is 10 and you have all this information now based on the computed RAC score the risk that possess the most significant threat to the bank's Financial solvency is interest rate risk with an RAC score of 16. the bank should focus on managing its interest straight exposure to mitigate the potential losses and maintain Financial stability that's well and good it has identified that interest rate risk is the highest risk for banks financial solvency issue I want to ask is there a chance that they might go bankrupt probably like a very common man question and lets you watch rgbt or gpt4 says while it's not possible to predict the future with certainty thank you chargpt the financial data provided suggests that bank has a relatively stable financial position however external factors such as these things can say so now it actually explicitly says the bank has a relatively stable financial position that's quite surprising because as we know it's not the case these factors suggest the bank is not an immediate danger of Bank bankruptcy and then it has mentioned couple of more details in conclusion while there is always a chance that bank might go bankrupt the available information suggests that this bank is in a relatively stable position however the bank should continue to Monitor and manage its risks to maintain its Financial stability and solvency what did I understand from this first charge GPT or gpt4 in this particular case can do balance sheet analysis it's quite obvious we'll do another example second if you ask a question that is forward looking like futuristic I think it may not be really good at doing it because a lot of external factors play into predicting something or something happening so may not be quite accurate but I think looking at the given data like I literally pasted the data I like literally copied and pasted the data and uh I cannot read this data like I have to put it on Excel split it do you know column splitting and all these things then I have to look at probably bro draw a train line and lot of these things but this is quite good in what it has managed to create now I'm going to put another balance sheet and then ask it to give me an opinion so I'm going to go ask for let's say apple balance it or Google alphabet alphabet meta is probably better meta balance sheet okay but ask for meta balance sheet and we got the meta balance sheet once we have the meta balance sheet we have 2019 2020 21 22 I'm going to copy this balance sheet all numbers 1000 get the balance sheet go back to GPT 4 I'm going to start a new conversation and then say gpt4 and then this is a bell this is the balance sheet of a tick company give me some key insights should I also also inform if I should invest in this company let's see so I've literally pasted meta's balance sheet and we are asking GPT 4 first to give some insights and also if we should invest in this company or probably like buy the stock says based on the provided balance sheet here are some key insights total assets have been growing consistently over the years with significant increase between 2019 and 2020 and the steady growth in 2021 and 2022 let's go see the total assets where is the total asset okay it has been growing good chat GPT correct one point then the next thing is total liabilities have shown a significant increase cool total liabilities significant increase that's a significant increase good chargeability GPT 4 total Equity has been growing consistently although it has been slowed down between 21-22 let's look at Equity 2122 it is slowed down okay that's good it's uh it's quite a mix it back right um it's not actually growing consistently maybe this one okay let's go the next one and see the company is working capital has decreased since 2020 with the most significant drop so where is the working capital the working capital has from 51 000 or 51 million whatever 51 it has become 32 okay that's correct correct the total debt has almost doubled where is the total debt total date is almost double that's true and the total company the companies need tangible assets and tangible Book value have remained relatively stable okay it cannot provide investment advice cool GB for its okay nobody is going to hold you accountable Pro steady growth and total assets and total equity which indicates that the company's financial position is improving relatively low debt levels compared to the equity and total assets and no clue what does it mean decreasing working capital which may be a concerned for short-term Financial Health increasing total liabilities and total debt which may impact company's ability to manage its financial obligations before making any investment decision okay this is like the typical disclaimer it has not directly told me whether I should invest or not invest but it has actually done a decent analysis the summary is quite good I'm not a financial expert I'm not a balance sheet expert but if I can literally compare two different numbers the narration or the insights that gpt4 gave me is absolutely spot on like I can look at the data and then do it I would have probably taken a lot more time to do it but looks like gpt4 can do it really really well so what did I learn from this video I learned gpt4 can actually do balance sheet analysis financial statement analysis I would love to try more experiments like this if you have any experiments like this please let me know in the comment section I would love to try and if you are a financial expert watching this video please let me know if this is hallucinations love complete BS or is it actually true like impressive for you and second thing is if something is forward looking I'm not going to ever trust what gpd4 tells me because I know for sure that it has mentioned that svb has a stable financial position but it actually you know in bankrupt um so this is exactly what I where I want to close this video I would look forward to hear your thoughts about this video see you in another video Happy prompting