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IS, BS, CF on different sheets or all together?

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9:12 pm
March 3, 2010


AK51

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When building a model, is it better have to have the Income Statement, Cash Flow Statement, and Balance Sheet all on one tab (vertically listed) or separate them on three different tabs?

9:49 pm
March 3, 2010


Equity Researcher

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I think it is better to build the whole model on one tab and then having separate output tabs. The main advantage is auditing possibilities, as it's much easier to make sure all your formulas are referencing the correct cells. It i also easier because you know Column H is X year, throughout the model, easier for formatting the model for print, easier for building in checks along the way, etc. You can have assumptions up on top, then IS, then BS, then CF… then all the ancillary statements, and look-up tables all the way at the bottom.

As for crashing models, all you need is a circ breaker where your total interest line from the D&I schedule feeds into your IS. =if(circbreaker=1, H250, "") If your model crashes you just set the circ breaker to 0, then back to 1 and you're good to go.

Benefits of having it on different tabs:
- its easier for non-bankers to navigate; try walking a CFO through a 3,000 row LBO model

Benefits of having it all on one tab:
- ease of printing
- ease of auditing
- you can Ctrl+H your entire model if you need to change something
- much faster when modeling / building from scratch

A few tips:
1- always use a cric breaker
2- have checks all over your model and have them all feed into one summary section which flags any error and the area (i.e. BS, IS, CF, D&I, etc…) so Q1-Q4=FYE, BS items: Q4=FYE, etc…
3- make sure the error flags are ridiculously apparent so you never print/paste a section of your model while any errors exist
4- use appropriate font color coding (blue hardcore, black formula, green link from another sheet)
5- take advantage of custom text formats… so a 0/1 toggle displays as Yes/No, or On/Off
6- learn to use offset, match, choose… they are incredibly powerful when used sparingly
7- build your model with a focus on catching mistakes
8- only use a handful of formatting styles
9- build a model so it can be easily used, adapted by others
10- begin a few columns in, so you can use the added margin space for notes/flags/toggles

Finally, always keep your Column A at about 1.5 width and mark the beginning of each section with an "x", so when you go to the A column and hit ctrl-up/dwn you quickly cycle through the statements.

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