Financial statement linkage with a model
Originally published: 02/10/2020 12:51
Publication number: ELQ-56448-1
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Financial statement linkage with a model

Learn how the three main financial statement are related and linked with this comprehensive model

The first step for anyone learning to build a model is to understand how the three basic financial statement are interrelated and interlinked. This will form the building block to understanding how to include any item in the model while still maintaining a balanced balance sheet.

This model was created not to make any kind of forecast or projection, but simply to help build an understanding of how financial statements work and the interlink between the three basic financial statement (income statement, balance sheet and cashflow statement).

With this model I try to include all the necessary and common items you are likely to find in a basic financial statement while making provisions for sub items that drives the main item. Data input can only be made on the income statement and the balance sheet while the cashflow statement is driven by figures on both statements.

If you will take your time to go through the model and key in the relevant data input, you can easily see which items are affected by your date input. One great thing about the model is that, the balance sheet always balance. For input cells not visible, click the (+)sign on the left side of the sheet to see input cells.

This Best Practice includes
1 Excel file

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Further information

To build an understanding of the three basic financial statement and how they are interlinked

For learning purpose only

Although a complete financial statement can be built with the model if you have the necessary data, the model is used for purposes other than learning at you own risk

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