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Learn/3-Statement Modeling/Module 4
4.2·6 min read

Investing, Financing & Tying to Cash

Add investing and financing cash flows, sum to the net change in cash, and reconcile to the balance sheet's cash line.

By the end you can
  • ✓Classify investing vs financing flows
  • ✓Reconcile ending cash to the balance sheet
Investing (CFI)
  • ›Capital expenditures (outflow)
  • ›Acquisitions / asset sales
  • ›Purchases/sales of investments
Financing (CFF)
  • ›Debt drawn or repaid
  • ›Equity issued or bought back
  • ›Dividends paid (outflow)
Ending Cash=Beginning Cash+CFO+CFI+CFF\text{Ending Cash} = \text{Beginning Cash} + \text{CFO} + \text{CFI} + \text{CFF}
The three sections sum to the net change in cash; add it to beginning cash to get ending cash.
The reconciliation that proves it

That ending cash figure must equal the cash line on the period-end . If it doesn't, the model has a leak - this tie-out is one of the most important checks in three-statement modeling.

Check yourself

Beginning cash 100, CFO 140, CFI -90, CFF -20. What is ending cash?

Practice in the simulator

Lock it in by building it yourself in a live, graded spreadsheet.

Practice the net-income-to-cash bridge →
← Previous · 4.1
The Indirect Method (Operating Cash)
Next · 5.1 →
Cash Is the Plug