3 Statement Financial Modeling: Step 2

So we completed step number one, filling up historical line items for income statement and balance sheet, and now we're getting to step number two: completing the cash flow statement for historical years. Let's go ahead and do that.

Cash flow statement includes cash from operations, cash from investing activities, and cash from financing activities of the company. Operating cash flow includes net income as a cash inflow, depreciation and amortization as cash inflow as well because it's a non-cash expense, and changes in working capital.

Let's go ahead and start with cash from operations line items. Net income I can find in the income statement I just built in row 16. My depreciation and amortization I can find also in the income statement in this model in row 10. And to find out changes in working capital, I need to complete my supporting schedules down below. Let's go ahead and do that as well.

To find change in net working capital, I would take accounts receivables, inventory, and accounts payable, calculate net working capital as a sum of accounts receivable and inventory minus accounts payable, and calculate change in net working capital year after year.