3 Statement Financial Modeling: Step 1

So let's go ahead and complete our three statement model following step by step. The very first step, as we discussed, is to derive historical information from the financial statements of the company and calculate the totals. Let's go ahead and do that. We already filled up historical information for the company for you. All we need to do is calculate the totals.

Let's do it for income statement first. My gross profit will be revenue minus cost of goods sold. I like the formula and I'm going to fill it to the right with Ctrl+R shortcut. My total expenses I'm going to sum up all the line items above, such as selling general and administrative expenses, research and development expenses, depreciation and amortization, and interest expenses. To calculate that total I used Alt+Equals shortcut. Beautiful.

Let's fill it to the right and calculate my income before income taxes, which is my gross profit minus total expenses. Again filling it to the right and going to the line item net income, which is my income before income taxes minus provision for income taxes. Great job, we just calculated all the totals for income statement and completed it.