📑 3-Statement Financial Forecasting Model

A fully integrated Income Statement → Balance Sheet → Cash Flow Statement model built to Wall Street standards — the foundational tool behind every M&A deal, buyout, and valuation on Wall Street.

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📌 Overview

This model reconstructs 3–4 years of historical financials for a real public company and projects them forward — wiring all three statements together so that every assumption flows automatically through the entire model.

This is the core deliverable required in Investment Banking, Private Equity, and Corporate Finance recruiting.

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🗂️ Project Structure

three-statement-model/
│
├── model/
│   └── three_statement_model.xlsx      # The full Excel model
│
├── docs/
│   ├── assumptions.md                  # Key forecast drivers & rationale
│   └── methodology.md                  # Step-by-step build notes
│
├── data/
│   └── source_financials.pdf           # Raw 10-K / annual report data
│
├── screenshots/
│   ├── income_statement.png
│   ├── balance_sheet.png
│   └── cash_flow.png
│
├── .gitignore
├── LICENSE
└── README.md

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🔬 Model Architecture

The Three Statements — Fully Integrated

Income Statement
      │
      ▼
  Net Income ──────────────────────────┐
      │                                 │
      ▼                                 ▼
Cash Flow Statement              Balance Sheet
  Operating CF ───────► Cash ──► Assets / Equity
  Investing CF
  Financing CF

Every number connects. Change one revenue assumption — every statement updates automatically.

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Statement 1 — Income Statement

Line Item	Method
Revenue	YoY growth % assumption
COGS	Gross margin % of revenue
Gross Profit	Revenue − COGS
Operating Expenses	% of revenue or fixed growth
EBITDA	Calculated
D&A	% of PP&E (Balance Sheet linked)
EBIT	EBITDA − D&A
Interest Expense	Linked to Debt Schedule
EBT	EBIT − Interest
Net Income	EBT × (1 − Tax Rate)

Statement 2 — Balance Sheet

• Assets: Cash (plug), Receivables (Days Sales Outstanding), Inventory (Days Inventory Outstanding), PP&E (CapEx − D&A roll)
• Liabilities: Payables (Days Payable Outstanding), Debt (Debt Schedule linked)
• Equity: Retained Earnings roll (Prior + Net Income − Dividends)

Statement 3 — Cash Flow Statement

Built using the indirect method:

Net Income
+ D&A (non-cash add-back)
± Changes in Working Capital
= Operating Cash Flow

− CapEx
= Free Cash Flow (FCF)

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📐 Wall Street Formatting Conventions

This model follows industry-standard formatting exactly:

Convention	Rule
🔵 Blue font	Hard-coded inputs typed manually (historical data)
⚫ Black font	Formula-driven outputs (calculated cells)
Header rows	Bold, dark background, white text
Negatives	Shown in parentheses (1,234) not with minus signs
Units	Stated clearly — $ in millions in header
Tab structure	Cover → IS → BS → CF → Working Capital → DCF

⚠️ Recruiters will open your Excel file and judge the formatting before reading a single number.

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📊 Key Forecast Assumptions

Driver	Assumption	Rationale
Revenue Growth	X% YoY	Based on analyst consensus + trend
Gross Margin	X%	3-year historical average
D&A	X% of PP&E	Company guidance
CapEx	X% of Revenue	Historical capex intensity
DSO	X days	Historical working capital cycle
Tax Rate	X%	Effective rate from 10-K

(Full assumption rationale in docs/assumptions.md)

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🚀 How to Use

1. Download model/three_statement_model.xlsx
2. Enable macros if prompted
3. Navigate tabs — Cover → Income Statement → Balance Sheet → Cash Flow
4. Change assumptions in the blue cells only — all outputs recalculate automatically
5. Check the balance sheet — Assets must equal Liabilities + Equity at all times

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🧰 Tools Used

Tool	Purpose
Microsoft Excel	Full model build
Yahoo Finance	Historical financial data
SEC EDGAR	10-K annual report source

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📄 License

MIT — see LICENSE