Module 3 • AI Exercise 1
Using AI to Decode Revenue & Costs
Treat the model as an analytical partner — not a substitute for your own judgment. The quality of your prompt shapes the quality of the thinking you get back.
Activity Introduction
The Objective
In this exercise, you will use an AI assistant as an analytical partner — not a substitute for your own judgment — to read a simplified income statement and ascertain the forces driving revenue and costs.
Your goal is to turn a static set of numbers into a dynamic story about volume, pricing power, cost structure, and fragility. The quality of your AI prompts will largely determine the quality of the analysis you get back.
Choose a Company
Pick One Income Statement to Work With
You will choose one fictional company and stick with it for the entire exercise. Each is deliberately simplified so you can focus on patterns rather than technical detail.
The Workflow
Four Steps to Better AI Analysis
You will draft a prompt, compare it to a benchmark, refine it, and evaluate what you learned. Each step builds on the last — and the comparisons matter more than the answers.
The Initial Prompt
Open your AI assistant in a separate window. Without looking at any sample language yet, write your own prompt asking it to analyze the company you chose. Your prompt should ask the AI to:
- Summarize what the numbers imply about revenue, volume, and price.
- Describe what the statement suggests about cost structure and fragility.
- Highlight at least three critical questions an executive should ask before trusting these results.
Paste your prompt and the AI’s response into the fields below. You will use them in later steps.
The Benchmark
Now compare your prompt to the example below. You are not trying to copy it — you are identifying the constraints and context the sample includes that your version did not, and vice versa.
Reveal Show sample prompt
You are an analytical partner for an executive reading an income statement.
I will give you a simplified two-year income statement for a single company.
Your task is to:
1. Describe what is happening to revenue in terms of both price and quantity.
Use the framework from Ray Dalio's "Revenue: Price × Quantity" lesson:
income levels, credit availability, the economic cycle, and substitutes.
2. Describe what the income statement suggests about this company's cost
structure:
- Which costs appear more fixed versus variable?
- Where do you see operating leverage helping or hurting?
- How fragile or resilient does this cost structure appear under a 20%
revenue decline?
3. List at least five specific, forward-looking questions an executive
should ask before relying on this income statement:
- Questions about demand and pricing power
- Questions about cost flexibility and operating leverage
- Questions about revenue recognition timing (to be explored in Lesson 6)
Be explicit about what you can infer from the numbers and what would
require more information. Ask clarifying questions where appropriate.
Here is the company:
[PASTE COMPANY INCOME STATEMENT HERE]
The Refinement
Rewrite your prompt using any elements from the benchmark that make sense to you — especially instructions that force the AI to tie revenue to price and quantity, or costs to fixed versus variable structures. Run the revised prompt with the same company.
Paste the revised prompt and the new AI response below.
The Evaluation
The goal is not to decide which answer sounds smarter, but which output shows genuine understanding of the business behind the numbers. Work through each question below as you compare the two versions of the AI output.