Financial Modeling Skill

Overview

I help you build integrated 3-statement financial models that link Income Statement, Balance Sheet, and Cash Flow Statement. These models are essential for valuation, budgeting, and strategic planning.

What I can do:

Build income statement projections

Create balance sheet forecasts

Generate cash flow statements

Model working capital requirements

Build debt schedules and interest calculations

Create scenario analysis (base/bull/bear cases)

What I cannot do:

Access real-time financial data

Guarantee projection accuracy

Provide accounting advice

Replace professional financial analysis

How to Use Me

Step 1: Provide Historical Data

I need 2-3 years of:

Income statement (revenue, COGS, operating expenses)

Balance sheet (assets, liabilities, equity)

Cash flow statement (optional but helpful)

Step 2: Define Projection Assumptions

Key drivers:

Revenue growth rate

Gross margin

Operating expense ratios

Capex as % of revenue

Working capital days (DSO, DIO, DPO)

Step 3: Choose Model Scope

Basic

Income statement only

Standard

Income statement + balance sheet

Full

Complete 3-statement model with cash flow Model Architecture Three-Statement Linkages ┌─────────────────────────────────────────────────────────────┐ │ INCOME STATEMENT │ │ Revenue → Gross Profit → Operating Income → Net Income │ └─────────────────────────┬───────────────────────────────────┘ │ Net Income flows to Retained Earnings │ ▼ ┌─────────────────────────────────────────────────────────────┐ │ BALANCE SHEET │ │ Assets = Liabilities + Equity │ │ (Must balance via Cash as plug) │ └─────────────────────────┬───────────────────────────────────┘ │ Changes in B/S items drive CF Statement │ ▼ ┌─────────────────────────────────────────────────────────────┐ │ CASH FLOW STATEMENT │ │ Operating CF + Investing CF + Financing CF = Δ Cash │ │ Ending Cash flows back to Balance Sheet │ └─────────────────────────────────────────────────────────────┘ Key Formulas Income Statement Drivers Revenue = Prior Year × (1 + Growth Rate) COGS = Revenue × (1 - Gross Margin %) Gross Profit = Revenue - COGS SG&A = Revenue × SG&A % EBITDA = Gross Profit - SG&A D&A = Prior PP&E × D&A Rate OR Revenue × D&A % EBIT = EBITDA - D&A Interest = Avg Debt × Interest Rate EBT = EBIT - Interest Taxes = EBT × Tax Rate Net Income = EBT - Taxes Balance Sheet Drivers Accounts Receivable = Revenue × (DSO / 365) Inventory = COGS × (DIO / 365) Accounts Payable = COGS × (DPO / 365) PP&E = Prior PP&E + Capex - D&A Retained Earnings = Prior RE + Net Income - Dividends Cash = Total Liabilities + Equity - Other Assets (plug) Cash Flow Statement Operating Cash Flow: Net Income + D&A (non-cash) - Increase in AR - Increase in Inventory + Increase in AP = Cash from Operations Investing Cash Flow: - Capex = Cash from Investing Financing Cash Flow: + Debt Issuance - Debt Repayment - Dividends = Cash from Financing Net Change in Cash = CFO + CFI + CFF Output Format

Financial Model: [Company Name]

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Projection Period

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[Years]

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Base Year

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[Year]

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Currency

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[USD/CNY/etc.]

Key Assumptions | Driver | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |

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| | Revenue Growth | XX% | XX% | XX% | XX% | XX% | | Gross Margin | XX% | XX% | XX% | XX% | XX% | | SG&A % Revenue | XX% | XX% | XX% | XX% | XX% | | Capex % Revenue | XX% | XX% | XX% | XX% | XX% | | DSO (days) | XX | XX | XX | XX | XX | | DIO (days) | XX | XX | XX | XX | XX | | DPO (days) | XX | XX | XX | XX | XX |

Income Statement Projection | ($M) | Base | Y1 | Y2 | Y3 | Y4 | Y5 | |

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| | ** Revenue ** | | | | | | | | Growth % | | | | | | | | COGS | | | | | | | | ** Gross Profit ** | | | | | | | | Gross Margin % | | | | | | | | SG&A | | | | | | | | ** EBITDA ** | | | | | | | | EBITDA Margin % | | | | | | | | D&A | | | | | | | | ** EBIT ** | | | | | | | | Interest Expense | | | | | | | | ** EBT ** | | | | | | | | Taxes | | | | | | | | ** Net Income ** | | | | | | | | Net Margin % | | | | | | |

Balance Sheet Projection | ($M) | Base | Y1 | Y2 | Y3 | Y4 | Y5 | |

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| | ** ASSETS ** | | | | | | | | Cash | | | | | | | | Accounts Receivable | | | | | | | | Inventory | | | | | | | | ** Current Assets ** | | | | | | | | PP&E (net) | | | | | | | | Other Assets | | | | | | | | ** Total Assets ** | | | | | | | | | | | | | | | | ** LIABILITIES ** | | | | | | | | Accounts Payable | | | | | | | | Short-term Debt | | | | | | | | ** Current Liabilities ** | | | | | | | | Long-term Debt | | | | | | | | ** Total Liabilities ** | | | | | | | | | | | | | | | | ** EQUITY ** | | | | | | | | Common Stock | | | | | | | | Retained Earnings | | | | | | | | ** Total Equity ** | | | | | | | | ** Total L + E ** | | | | | | | ✓ Balance Check: Assets = Liabilities + Equity

Cash Flow Statement | ($M) | Y1 | Y2 | Y3 | Y4 | Y5 | |

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| | ** Operating Activities ** | | | | | | | Net Income | | | | | | | D&A | | | | | | | Change in AR | | | | | | | Change in Inventory | | | | | | | Change in AP | | | | | | | ** Cash from Operations ** | | | | | | | | | | | | | | ** Investing Activities ** | | | | | | | Capex | | | | | | | ** Cash from Investing ** | | | | | | | | | | | | | | ** Financing Activities ** | | | | | | | Debt Changes | | | | | | | Dividends | | | | | | | ** Cash from Financing ** | | | | | | | | | | | | | | ** Net Change in Cash ** | | | | | | | Beginning Cash | | | | | | | ** Ending Cash ** | | | | | |

Key Metrics Summary | Metric | Base | Y1 | Y2 | Y3 | Y4 | Y5 | |

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| | Revenue Growth | | | | | | | | Gross Margin | | | | | | | | EBITDA Margin | | | | | | | | Net Margin | | | | | | | | ROE | | | | | | | | Debt/Equity | | | | | | | | FCF | | | | | | | Tips for Better Results Provide clean historical data in a consistent format Be specific about growth drivers (volume vs price, organic vs acquisition) Specify industry context for appropriate benchmarks Ask for scenario analysis to understand range of outcomes Request sensitivity tables for key assumptions Limitations Projections are only as good as the assumptions Cannot model complex corporate structures Does not account for one-time items automatically Simplified tax calculations Currency assumed constant (no FX modeling) Built by the Claude Office Skills community. Contributions welcome!