A 3 Statement Financial Model is a cohesive framework that combines the three core financial statements—Income Statement, Balance Sheet, and CashFlow Statement—into a single, interconnected model. This integration allows businesses to analyze their financial performance comprehensively and make informed decisions. Here’s a breakdown of each component and its significance:
1. Income Statement
2. Balance Sheet
3. CashFlow Statement
Benefits of the 3 Statement Financial Model
Holistic View: Provides a comprehensive understanding of financial health and operational performance.
Scenario Analysis: Facilitates financial forecasting and analysis by adjusting assumptions in one statement and observing the effects across others.
Informed Decision-Making: Supports strategic planning, budgeting, and investment decisions based on interconnected financial insights.