The P&L, Balance sheet, and Cash flow statements are three interrelated parts. The P&L feeds net income on the liabilities and equity side of the Balance sheet. At the same time, we obtain Cash (an asset) by summing the bottom-line result of the Cash flow statement with previous year cash. If the three statements don’t ‘talk’ to each other, it means that a mistake has been made.
The relationship between P&L, Balance sheet, and Cash flow allows us to build financial models that rely on 3-statement modelling in which the Balance sheet is balanced and ending cash equals beginning cash plus net cash flow.
This is an open-access Excel template in XLSX format that will be useful for anyone who wants to work as a Financial Analyst, Business Analyst, Consultant, Corporate Executive, or everyone preparing a corporate presentation.
You can now download the Excel template for free.
3-Statement Model is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.