3-Statement Modeling (1st Ed.)

Overview

Being able to construct and balance a 3-statement model is a critical skill for many roles in accounting and finance. Including an income statement, cash flow statement, and balance sheet helps to assess the financial health of a business, and connecting the balance sheet correctly adds an error detection system that highlights issues within the financial model. This course discusses model circularity in detail, beginning with the advantages and disadvantages of building circular models, reviewing the model’s two circular loops, and walking through the steps to install a circularity switch. Important figures from the financial statements are summarized on an attractive model dashboard, and the course also reviews the print settings used to format the model as a polished financial presentation.

Highlights

• Model design and drivers
• Operational schedules
• Capital structure, including debt and equity corkscrews and a dynamic revolver
• Linking the three financial statements and error detection
• Model circularity and installing a circularity switch
• Dashboards, model checks, and print settings

Prerequisites

None are required, but Accounting Fundamentals and Introduction to 3-Statement Modeling are recommended.

Objectives

• Review the best way to design a 3-statement model, prioritized for presentation and printing
• Use separate corkscrews to build debt and equity schedules, including detailed instructions for installing a dynamic revolving line of credit
• Understand the correct linkages between the three financial statements and how to use the balance sheet as an error detection system for the model
• Discuss the two circular loops in the financial model and how to connect them to a circularity switch to reset the model when needed
• Pull important figures from the financial statements into a rich dashboard with graphs highlighting critical model insights
• Summarize model checks on the cover page with conditional formatting to alert the user to any areas of concern in the model

Preparation

None