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Explore this video tutorial on building a 3-statement financial model in Excel, walking through the key inputs, formulas, and assumptions for this step of the analysis.
Video Transcription:
Full Video Transcript
So we already completed all historical numbers for all three statements: income statement, balance sheet, and cash flow statement. We completed historical and forecasted years for assumptions and supporting schedules, and now we're gonna complete our three statement model by filling up income statement, balance sheet, and cash flow statement for the forecast period.
Revenue and Cost of Goods Sold
Let's go ahead and start with the income statement first. My revenue in the cell J4 will be equal to the revenue in the previous year multiplied by 1 plus my revenue growth in my assumptions down below in row 62. My COGS is equal to my revenue multiplied by COGS by revenue assumption we have down below as well in row 65.
My gross profit formula is already calculated here, so I'm going to take it from the previous year and check it. It's revenue minus COGS, all perfect. So I can move on to the next line item which is SG&A.
Operating Expenses and Depreciation
My selling, general and administrative expenses I'm gonna calculate as revenue, and I'm gonna anchor the row for that cell, multiplied by my SG&A by revenue assumption down below in row 66. And remember, my R&D as a percentage of revenue goes as the next line item here. So all I need to do here for R&D in the income statement is to fill this formula down with Ctrl+D, and it will flow beautifully because I already anchored the row for the revenue.
My depreciation and amortization, I'm gonna go down all the way down and find my assumption for D&A. It's in row 64: D&A as a percentage of PP&E opening balance. So I need to multiply that number by my PP&E opening balance, which you can find in row 23 and column I because it's opening balance. Again, I'm gonna take the ending balance number here, perfect.
Interest Expense and Tax Calculations
Next is calculating interest. Again, I'm going to find out my assumptions down below. It's in row 63: interest as a percentage of debt beginning balance. So I'm going to multiply it by the debt beginning balance in my balance sheet. I can find it in cell I28, great job here.
My total expenses without equals, I will sum up all of the above. And income before income taxes, I will steal the formula from the year before. Provision for income taxes here, I remember I assumed my tax rate for the forecasted year in my assumption schedule. So I'm going to find it in row 68, and I'm going to multiply it by income before income taxes for the same year to find my provision for income taxes for 2021, great job. And for the net income, again, I'm gonna take the formula that we already filled in the very first step of our model.
Filling Formulas Across Forecast Years
So now my income statement for 2021 is ready for the first forecasted period, and I want to fill all these formulas to the right up to the cell O4. So I'm going to highlight it from the cell I'm located in with the F5 function, go to window, and I'm gonna put in the reference cell the cell to which I'm going to highlight the range, which is O4. And then with Shift+Enter, I will highlight the whole range, and with Ctrl+R, I'm gonna fill it all to the right.
Please notice that my D&A and interest are not filled yet because some of the schedules below are not filled yet. Trust the steps, it will flow through the model and fill up the formulas here. Great job, income statement for forecast periods are ready, and now in the next step we are going to calculate our balance sheet for the forecasted period.
