6.1·7 min read
Build It in Order
Build the income statement to EBIT, then the supporting schedules, then finish the statements and link cash.
By the end you can
- ✓Sequence a three-statement build
- ✓Know why supporting schedules come before the finished statements
A model comes together in a deliberate order. Skip ahead and you create circular references you didn't intend or balances that won't tie.
- down to EBIT (revenue, COGS, OpEx).
- Supporting schedules: depreciation/, the debt schedule (and its interest), and .
- Finish the : interest (from the debt schedule), taxes, net income.
- : operating, investing, financing.
- : roll forward every account; cash comes from the .
- Add the revolver last to absorb any shortfall and close the loop.
Schedules before statements
Depreciation, debt, and working-capital schedules feed the statements. Building them first means the and just reference clean, already-computed numbers.
Check yourself
Why build the depreciation and debt schedules before finishing the income statement?