Financial Model (3-Statement)

A three-statement financial model is the integrated projection of a company's profit and loss, balance sheet and cash flow — built so that the three statements tie together and the cash position is real. The model is the standard instrument of decision-making: a funding round needs the investor's model, a bank loan needs the lender's projection, a business plan needs the numbers behind the narrative. The model converts the business's operating assumptions into the financial future that everyone prices.

The model is a discipline of linkages. Revenue assumptions drive the P&L; the P&L drives the tax and the balance sheet; the balance sheet drives the working capital; and the cash flow ties it together — the model is only as good as the weakest assumption and the tightest linkage. Scenario and sensitivity analysis then tests the business against its risks: what happens to cash if revenue falls 20%, if the debtor days stretch, if the margin compresses.

The cost of a weak model is a decision built on a mirage. A model that does not tie leaves the investor asking for a rework at the term sheet stage; a model with optimistic but unsupported assumptions collapses at the first diligence test; a lender's model that shows negative cash in year two kills the facility. The model that is internally consistent and conservatively built is the one that gets the deal done.

This service is for companies preparing for funding, borrowing, or planning — and for their advisors. We build the integrated three-statement model from the business's actuals and assumptions, run the scenario and sensitivity analysis, document the assumptions, and deliver a model the investor, the banker or the board can rely on.