3 Statement Financial Modeling: Step 4

We just completed step three by calculating historical value drivers. Now it's time to make assumptions for the forecasted years for these value drivers. When you make assumptions for the forecasted period in a three statement model, you want to take into consideration historical values, information in the MD&A and footnotes sections of the company's financial statements, and possibly do research for the industry. In addition to that, the assumptions we will determine in our model will drive the forecast for all three of our main financial statements above.

For simplicity and teaching purposes here, I will just take an average of the historical years for value drivers to make assumptions for my first forecasted period, 2021. So here in cell J62, I'm going to put an average formula for the previous four years. I like the formula, and I'm going to fill the formula down.

You can see that I have a break here between ranges I would like to highlight, so I'm going to use Shift plus F8 shortcut to grab several non-contiguous ranges. After that, I want to use F2 function in cell J62, then Control Enter to fill only the formulas down but not the format. Great job.