3 Statement Model

Environment

This skill assumes headless openpyxl — you are producing an .xlsx file on disk. Follow the excel-author skill's conventions for cell coloring, formulas, named ranges, and sensitivity tables. Recalculate before delivery: python /path/to/excel-author/scripts/recalc.py ./out/model.xlsx.

3-Statement Financial Model Template Completion

Complete and populate integrated financial model templates with proper linkages between Income Statement, Balance Sheet, and Cash Flow Statement.

⚠️ CRITICAL PRINCIPLES — Read Before Populating Any Template

Formulas over hardcodes (non-negotiable):

• Every projection cell, roll-forward, linkage, and subtotal MUST be an Excel formula — never a pre-computed value
• When using Python/openpyxl: write formula strings (ws["D15"] = "=D14*(1+Assumptions!$B$5)"), NOT computed results (ws["D15"] = 12500)
• The ONLY cells that should contain hardcoded numbers are: (1) historical actuals, (2) assumption drivers in the Assumptions tab
• If you find yourself computing a value in Python and writing the result to a cell — STOP. Write the formula instead.
• Why: the model must flex when scenarios toggle or assumptions change. Hardcodes break every downstream integrity check silently.

Verify step-by-step with the user:

1. After mapping the template → show the user which tabs/sections you've identified and confirm before touching any cells
2. After populating historicals → show the user the historical block and confirm values/periods match source data
3. After building IS projections → run the subtotal checks, show the user the projected IS, confirm before moving to BS
4. After building BS → show the user the balance check (Assets = L+E) for every period, confirm before moving to CF
5. After building CF → show the user the cash tie-out (CF ending cash = BS cash), confirm before finalizing
6. Do NOT populate the entire model end-to-end and present it complete — break at each statement, show the work, catch errors early

Formatting — Professional Blue/Grey Palette (Default unless template/user specifies otherwise)

Keep colors minimal. Use only blues and greys for cell fills. Do NOT introduce greens, yellows, oranges, or multiple accent colors — a clean model uses restraint.

That's 3 blues + 1 grey + white. If the template has its own color scheme, follow the template instead.

Font color signals what a cell is (input/formula/link). Fill color signals where you are (header/data/check).

Model Structure

Identifying Template Tab Organization

Templates vary in their tab naming conventions and organization. Before populating, review all tabs to understand the template's structure. Below are common tab names and their typical contents:

Template Review Checklist

• Identify which tabs exist in the template (not all templates include every schedule)
• Note any template-specific tabs not listed above
• Understand tab dependencies (e.g., which schedules feed into the main statements)
• Locate input cells vs. formula cells on each tab

Understanding Template Structure

Before populating a template, familiarize yourself with its existing layout to ensure data is entered in the correct locations and formulas remain intact.

Identifying Row Structure

• Locate the model title at top of each tab
• Identify section headers and their visual separation
• Find the units row indicating $ millions, %, x, etc.
• Note column headers distinguishing Actuals vs. Estimates periods
• Confirm period labels (e.g., FY2024A, FY2025E)
• Identify input cells vs. formula cells (typically distinguished by font color)

Identifying Column Structure

• Confirm line item labels in leftmost column
• Verify historical years precede projection years
• Note the visual border separating historical from projected periods
• Check for consistent column order across all tabs

Working with Named Ranges Templates often use named ranges for key inputs and outputs. Before entering data:

• Review existing named ranges in the template (Formulas → Name Manager in Excel)
• Common named ranges include: Revenue growth rates, cost percentages, key outputs (Net Income, EBITDA, Total Debt, Cash), scenario selector cell
• Ensure inputs are entered in cells that feed into these named ranges

Projection Period

• Templates typically project 5 years forward from last historical year
• Verify historical (A) vs. projected (E) columns are clearly separated
• Confirm columns use fiscal year notation (e.g., FY2024A, FY2025E)

Margin Analysis

Note: The following margin analysis should only be performed if prompted by the user or if the template explicitly requires it. If no prompt is given, skip this section.

Calculate and display profitability margins on the Income Statement (IS) tab to track operational efficiency and enable peer comparison.

Core Margins to Include

Income Statement Layout with Margins

Display margin percentages directly below each profit line item:

• Gross Margin % below Gross Profit
• EBIT Margin % below EBIT
• EBITDA Margin % below EBITDA
• Net Income Margin % below Net Income

Credit Metrics

Note: The following Credit analysis should only be performed if prompted by the user or if the template explicitly requires it. If no prompt is given, skip this section.

Calculate and display credit/leverage metrics on the Balance Sheet (BS) tab to assess financial health, debt capacity, and covenant compliance.

Core Credit Metrics to Include

Credit Metric Hierarchy Checks

Validate that Upside shows strongest credit profile:

• Leverage: Upside < Base < Downside (lower is better)
• Coverage: Upside > Base > Downside (higher is better)
• Liquidity: Upside > Base > Downside (higher is better)

Covenant Compliance Tracking

If debt covenants are known, add explicit compliance checks comparing actual metrics to covenant thresholds.

Scenario Analysis (Base / Upside / Downside)

Use a scenario toggle (dropdown) in the Assumptions tab with CHOOSE or INDEX/MATCH formulas.

Key Drivers to Sensitize: Revenue growth, Gross margin, SG&A %, DSO/DIO/DPO, CapEx %, Interest rate, Tax rate.

Scenario Audit Checks: Toggle switches all statements, BS balances in all scenarios, Cash ties out, Hierarchy holds (Upside > Base > Downside for NI, EBITDA, FCF, margins).

SEC Filings Data Extraction

If the template specifically requires pulling data from SEC filings (10-K, 10-Q), see references/sec-filings.md for detailed extraction guidance. This reference is only needed when populating templates with public company data from regulatory filings.

Completing Model Templates

This section provides general guidance for completing any 3-statement financial model template while preserving existing formulas and ensuring data integrity.

Step 1: Analyze the Template Structure

Before entering any data, thoroughly review the template to understand its architecture:

Identify Input vs. Formula Cells

• Look for visual cues (font color, cell shading) that distinguish input cells from formula cells
• Common conventions: Blue font = inputs, Black font = formulas, Green font = links to other sheets
• Use Excel's Trace Precedents/Dependents (Formulas → Trace Precedents) to understand cell relationships
• Check for named ranges that may control key inputs (Formulas → Name Manager)

Map the Template's Flow

• Identify which tabs feed into others (e.g., Assumptions → IS → BS → CF)
• Note any supporting schedules and their linkages to main statements
• Document the template's specific line items and structure before populating

Step 2: Filling in Data Without Breaking Formulas

Golden Rules for Data Entry

Safe Data Entry Process

1. Identify the exact cells designated for input (usually highlighted or labeled)
2. Enter historical data first, then verify formulas are calculating correctly for those periods
3. Enter assumption drivers that feed forecast calculations
4. Review calculated outputs to confirm formulas are working as intended
5. If a formula cell must be modified, document the original formula before making changes

Handling Pre-Built Formulas

• If formulas reference cells you haven't populated yet, expect temporary errors (#REF!, #DIV/0!) until all inputs are complete
• When formulas produce unexpected results, trace precedents to identify missing or incorrect inputs
• Never delete rows/columns without checking for formula dependencies across all tabs

Step 3: Validating Formulas

Formula Integrity Checks

Before relying on template outputs, validate that formulas are functioning correctly:

Common Formula Issues to Watch For

• Mixed absolute/relative references causing incorrect results when copied across periods
• Broken links to external files or deleted ranges (#REF! errors)
• Division by zero in early periods before revenue ramps (#DIV/0! errors)
• Circular reference warnings (may be intentional for interest calculations)
• Inconsistent formulas across projection columns (use Ctrl+\ to find differences)

Validating Cross-Tab Linkages

• Confirm values that appear on multiple tabs are linked (not duplicated)
• Verify schedule totals tie to corresponding line items on main statements
• Check that period labels align across all tabs