3 Statement Model

Description
A three-statement financial model is an integrated model that forecasts an organization's income statements, balance sheets, and cash flow statements.
The three core elements (income statements, balance sheets, and cash flow statements) require that you gather data ahead of performing any financial modeling.
There are several steps to building a three-statement financial model, including key steps like inputting historical data, defining parameters, and conducting your forecasting.
A three-statement financial model is an integrated model that forecasts an organization's income statements, balance sheets, and cash flow statements. It is the foundation on which we can build additional (and more advanced) models. These include merger models, DCF models, leveraged buyout (LBO) models, and various other financial model types, including those seen in the chart below.
These integrated models are powerful tools because they allow you to modify assumptions in one part of the model to see how it accurately and consistently influences the other areas of the model. Yet, before you begin, you must gather the necessary data points before conducting financial modeling.
At a minimum, you must gather an organization's most current SEC filings, equity research reports, and possibly press releases. Information can be more difficult to locate for private companies than for public ones. Financial reporting requirements differ in other countries.
A three-statement model includes various outputs and schedules. Yet, these three key elements accurately capture the association of the multiple line items across the financial statements.