3 Statement Financial Modeling: Step 3

So we just completed all line items for historical years for income statement, balance sheet, and cash flow statement. Now we're gonna calculate our value drivers for historical years so we can make assumptions for projected years and based on that fill up our three statements.

The line items we picked here are: revenue growth, interest as a percentage of debt beginning balance, depreciation and amortization as property plant and equipment opening balance, COGS as a percentage of revenue, selling general and administrative expenses as a percentage of revenue, research and development as a percentage of revenue, and tax rate. For balance sheet, we will calculate days receivable, days inventory, days payable, capital expenditures, debt issuance repayment, dividends to common stockholders, and equity issued repaid.

Let's start with the revenue growth here. I remember I have my revenue in the income statement in the very beginning of the model in row four, so I'm gonna take current year revenue divided by my previous year revenue minus one to calculate the revenue growth for 2017.

My interest as a percentage of debt beginning balance—I'm gonna find my interest in income statement as well, it's row 11, and I'm gonna divide it by debt beginning balance which is in balance sheet. Beginning balance is always equal to the ending balance, and we remember that in the balance sheet we have ending balance for the year. So ending balance for 2016 will be the beginning balance for 2017. That's why I grabbed the cell E28 here.