3-Statement Modeling
How the income statement, balance sheet, and cash flow statement link into one living model
6
modules
13
lessons
~1h
to complete
Master the model every analyst builds first: the three financial statements, how they connect, and how to make a balance sheet that balances itself. Then prove it in the simulator.
Your progress
13 lessons
13
The Three Statements
What each statement says, why profit is not cash, and the three links that tie them together.
- ✓6m1.1Three Statements, Three JobsThe income statement, balance sheet, and cash flow statement each answer a different question over a different time frame.
- ✓6m1.2Profit Is Not CashBecause of accrual accounting, a company can be profitable and still run out of cash. That gap is the whole reason the cash flow statement exists.
- ✓7m1.3How the Statements LinkThree connections wire the statements into one system: net income, the change in cash, and retained earnings.
- ?Module checkpointquiz →
22
The Income Statement
From revenue down to net income - the waterfall and how to project it.
32
The Balance Sheet
The accounting identity, working capital, and the roll-forwards that connect one period to the next.
- ✓6m3.1Assets = Liabilities + EquityThe balance sheet always balances by construction: what a company owns equals what it owes plus what owners have put in and earned.
- ✓7m3.2Working Capital & Roll-ForwardsEach balance connects to the next period through a roll-forward: begin, add the inflows, subtract the outflows, end.
- ?Module checkpointquiz →
42
The Cash Flow Statement
Reconcile profit to cash with the indirect method, then tie ending cash back to the balance sheet.
- ✓7m4.1The Indirect Method (Operating Cash)Start at net income, add back non-cash charges, then adjust for working-capital changes to reach cash from operations.
- ✓6m4.2Investing, Financing & Tying to CashAdd investing and financing cash flows, sum to the net change in cash, and reconcile to the balance sheet's cash line.
- ?Module checkpointquiz →
52
Linking the Statements
Why cash is the plug that makes the balance sheet balance - and the revolver loop that complicates it.
- ✓7m5.1Cash Is the PlugWhen every account is forecast and the cash flow statement explains the change in cash, the balance sheet balances on its own.
- ✓7m5.2The Revolver & CircularityA revolver auto-funds cash shortfalls, but the interest it charges loops back into net income - the classic circular reference.
- ?Module checkpointquiz →
62
Build & Check
The order to build a model in, and the checks that catch errors before they cost you.