Financial Forecasting Agent

Agent Description:

The Financial Forecasting Agent automates the analysis of historical financial data and produces forward-looking projections. It also enables dynamic "what-if" scenario analysis to guide strategic financial decisions. By combining historical records with retrieval-augmented generation (RAG), the agent generates insightful, actionable forecasts that adapt to market changes and user inputs.

Purpose and Components
  • Purpose: To generate accurate financial forecasts and support scenario planning based on historical data and economic trends.
  • Components:
    • A Forecasting & Modeling sub-agent that analyzes historical data and generates future projections.
    • A Financial Forecasting sub-agent that communicates forecast insights and supports interactive scenario-based adjustments.
Supported Capabilities
  • Extraction and ingestion of structured financial records (income, balance sheet, cash flow).
  • Forecasting revenue, expenses, net income, and cash flow over 6- and 12-month periods.
  • Supporting dynamic scenario simulation (e.g., increased costs, decreased sales).
  • Presenting clear summaries and side-by-side comparisons of original and adjusted forecasts.
LLM Used
  • Google Vertex
    Note: To learn more about the LLM and to modify its behavior, refer to the Configuring LLM settings section.

Sub-Agents

1. Forecasting and Modeling Agent

  • Role:Model Forecaster.
  • Scope:Ingest financial statements from PDFs and forecast key metrics.
  • Description:

    • Reads structured PDF financial documents (e.g., income statement, balance sheet, cash flow).

    • Generates projections for the next 6 and 12 months for:

      • Revenue

      • Operating Expenses

      • Net Income

      • Cash Flow

    • Distinguishes between historical data and forecasted values in output.

    • Includes confidence ranges where applicable to express forecast uncertainty.

  • LLM Used: Google Vertex (inherits from parent).
  • Tools used: MCP Client Tool for PDF ingestion.

2. Financial Forecasting Agent

  • Role:Financial Forecaster.
  • Scope:Generate summaries and simulate alternative financial scenarios.
  • Description:

    • Receives the forecasted data from the Forecasting & Modeling Agent.

    • Outputs a concise financial summary for:

      • Revenue

      • Expenses

      • Net Profit

      • Cash Position

    • Accepts user-defined scenario inputs (for example, "+10% cost", "-5% revenue").

    • Applies changes to the forecast and compares the impact:

      • Original forecast vs Adjusted forecast.

      • Clearly shows effect on financial health.

    • Use cases: strategic decision-making, planning adjustments, investor briefings.
  • LLM Used: Google Vertex (inherits from parent).
Tools Used:
  • MCP Client Tool – For extracting structured financial records from PDF documents.
Note: For details on modifying the Tools, refer Tools Library section.
Agent Workflow Behavior Summary
  • The Forecasting & Modeling Agent ingests historical financial records (income statement, balance sheet, cash flow) using MCP Client Tool, then forecasts revenue, operating expenses, net income, and cash flow for the next 6 and 12 months.
  • The forecast includes both raw numbers and confidence intervals, clearly marking forecasted vs historical data.
  • The Financial Forecasting Agent presents the forecast in a summary report.
  • Users may apply custom scenario changes (for example, change in sales volume, operating costs).
  • The agent recalculates projections and displays original vs updated forecasts side by side, explaining the financial impact of each change.
Sample Questions:
  • What is the projected cash flow for Gamma Inc in Q1 and Q2 2025?
  • If Gamma Inc’s revenue decreases by 10% in Q1 2025, how will that affect net income?