Being able to construct and balance a 3-Statement Modeling is a critical skill for many roles in accounting and finance. Including an income statement, cash flow statement, and balance sheet helps to assess the financial health of a business. Connecting the balance sheet correctly can also help by adding an error detection system to highlight issues with the financial model. This course discusses model circularity in detail beginning with the advantages and disadvantages of building circular models. We review the two circular loops in the model and walk through the necessary steps to install a circularity switch. Important figures from the financial statements are summarized on an attractive model dashboard. We also review important print settings used to format the model as a polished financial presentation.
Learning Objectives
• Determine how the balance sheet serves as an error detection system by correctly linking the income statement, cash flow statement, and balance sheet in a three-statement model.
• Identifythe two primary circular loops in a financial model and the steps required to implement a circularity switch to manage them effectively.
• Recognize how to present model results clearly by summarizing key figures on a dashboard and applying print and formatting techniques for professional output.
Major Topics
• Review the best way to design 3-Statement Modeling, which have been prioritized for presentation and printing.
• Use separate corkscrews to build debt and equity schedules, including detailed instructions for installing a dynamic revolving line of credit.
• Understand the correct linkages between the three financial statements and how to use the balance sheet as an error detection system for the model.
• Discuss the two circular loops in the financial model and how to connect them to a circularity switch to reset the model when needed.
• Pull important figures from the financial statements into a rich dashboard with graphs highlighting critical model insights.
• Summarize model checks on the cover page with conditional formatting to alert the user to any areas of concern in the model.
