3-Statement Model

How to build a powerful 3-Statement Model.

The 5 essential steps you need to follow:

If you want financial clarity, you need a structured approach.

That includes mastering your financial statements.
Once you understand the process, it’s all about execution.

Here’s how to create a 3-Statement Model step-by-step:

𝗦𝘁𝗲𝗽 𝟭: 𝗚𝗮𝘁𝗵𝗲𝗿 𝗛𝗶𝘀𝘁𝗼𝗿𝗶𝗰𝗮𝗹 𝗗𝗮𝘁𝗮
↳ Use sources like SEC filings and press releases.
↳ Collect 3–5 years of financial data for consistency.

𝗦𝘁𝗲𝗽 𝟮: 𝗦𝗲𝘁 𝗨𝗽 𝘁𝗵𝗲 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁
↳ Forecast revenues and calculate COGS.
↳ Project operating expenses and net income.

𝗦𝘁𝗲𝗽 𝟯: 𝗕𝘂𝗶𝗹𝗱 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁
↳ Forecast working capital and asset changes.
↳ Reconcile net cash changes with the balance sheet.

𝗦𝘁𝗲𝗽 𝟰: 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁 𝘁𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁
↳ Adjust for depreciation and working capital changes.
↳ Reconcile investing and financing activities.

𝗦𝘁𝗲𝗽 𝟱: 𝗠𝗼𝗱𝗲𝗹 𝗣𝗹𝘂𝗴𝘀 (𝗖𝗮𝘀𝗵 & 𝗥𝗲𝘃𝗼𝗹𝘃𝗲𝗿)
↳ Use revolving credit as a balancing account.
↳ Ensure the model remains accurate and balanced.

This framework simplifies a complex process.
Don’t feel overwhelmed—tackle it one step at a time.

Mastering this model will transform your financial insights.

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