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TASK-FIN-101-02 · Task family

Statement normalization & quality of earnings. Accounting interpretation, normalization adjustments and numerical analysis.

Custom buildenvironment · ENV-FIN-101 Research & Valuationrole · Private Equity Associate

Overview. Produce a supported normalized EBITDA, with each adjustment justified and the judgment calls shown as sensitivities.

A seller's adjusted EBITDA includes adjustments that don't all hold up. The agent has to review each one against the notes and management accounts and produce its own normalized figure.

Gains that inflate earnings must be removed as well as charges added back. A charge labelled non-recurring that recurs every year is a judgment call to be flagged, with a sensitivity, not silently accepted.

Value to the buyer

Quality of earnings is where deal value is won or lost. Trains agents to audit adjustments in both directions.

Specification. The task family, field by field.

spec · task/task-fin-101-02.yamlENV-FIN-101
task_id:
TASK-FIN-101-02
domain:
Investment Research & Valuation
parent_environment:
ENV-FIN-101 · Research & Valuation
target_role:
Private Equity Associate
objective:
Produce a supported normalized EBITDA, with each adjustment justified and the judgment calls shown as sensitivities.
starting_context:
Audited FY2025 statements and notes, management accounts, the seller's adjusted EBITDA bridge and prior-year restructuring disclosures.
tools:
  • get_financial_statements
  • search_filings
  • open_spreadsheet
  • run_financial_calculation
  • submit_research_artifact
required_actions:
  • Review each seller adjustment against documents
  • Identify adjustments the seller left out
  • Compute normalized EBITDA and a sensitivity for contested items
expected_outputs:
  • Normalized EBITDA bridge
  • Evidence for each adjustment
  • Sensitivity for contested items
interaction:
Single agent with tool access.
verification:
Each adjustment is checked against the documents. The bridge is recomputed.
reward:
Credit per correct adjustment and for the final figure. Rubric scoring for how contested items are presented.
difficulty:
Calibrated against reference models during acceptance testing
task_horizon:
Multi-step document analysis. Execution limits are agreed with the buyer.
delivery:
Task instances with seeded financials, reference bridges and verifier code.
commercial_unit:
Per validated task instance

Sample prompt. What the agent is asked to do, as a buyer would see it.

prompt · task-fin-101-02Example
The seller of Halcyon Components reports FY2025 EBITDA of $142.0m and adjusted EBITDA of $151.3m, adding back a $6.2m restructuring charge and $3.1m of owner-related consulting fees. Review the statements and notes, and produce your own normalized EBITDA with every adjustment supported. Show any judgment call as a sensitivity.

Verification criteria. What the verifier checks, and how.

  • Missing adjustment found

    Reported EBITDA includes a $9.5m gain on a warehouse sale, which is removed.

  • Owner fees

    The $3.1m consulting fees end at closing under the deal terms, so the add-back is accepted.

  • Restructuring flagged

    Restructuring charges appear in each of the last three years, so the add-back is contested.

  • Normalized figure

    $135.6m without the restructuring add-back.

  • Sensitivity

    $141.8m if the restructuring add-back is accepted.

  • Evidence

    Each adjustment cites the note or document it relies on.

Key failure modes. Where agents go wrong on this task.

  • Accepting the seller's add-backs and missing the one-off gain
  • Treating recurring restructuring as non-recurring because it's labelled so
  • Rejecting every adjustment instead of judging each one

Other task families. The rest of Research & Valuation, on the same FinanceWorld state.

Every environment is built to order. Tell us which workflow you need to train or evaluate, and where you are in the process.

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