Variance Analysis

Important: This skill assists with variance analysis workflows but does not provide financial advice. All analyses should be reviewed by qualified financial professionals before use in reporting.

Techniques for decomposing variances, materiality thresholds, narrative generation, waterfall chart methodology, and budget vs actual vs forecast comparisons.

When inputs are supplied through report URLs, read the SandBase API map. Resolve the current schema with sandbase_describe_tool before using a listed capability through sandbase_call_tool.

Define the sign convention before calculating and label favorable/unfavorable separately: a numerically positive variance can be favorable for revenue and unfavorable for expense. When the comparison value is zero, report the percentage as not meaningful rather than dividing by zero.

Variance Decomposition Techniques

Price / Volume Decomposition

The most fundamental variance decomposition. Used for revenue, cost of goods, and any metric that can be expressed as Price x Volume.

Formula:

Total Variance = Actual - Budget (or Prior)