3-Statement Financial Models

Also called a 3-way or integrated financial model. We build your profit and loss, balance sheet and cash flow statement as one linked model in Excel, so every assumption flows through to profit, cash and the balance sheet.

P&L, balance sheet, cash flow in one model

13-week cash view available

Reviewed before delivery

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Overview

What a 3-statement (3-way) model is

Most spreadsheets in growing businesses started as a budget and grew sideways. Revenue is typed into one tab, costs into another, and the cash balance is adjusted by hand to make the bank statement match. It works until someone asks a question the file cannot answer: what happens to cash if the biggest customer pays 30 days later, or if you hire three people in the second quarter.

A 3-statement model (also called a 3-way model) answers those questions because the statements are linked through the schedules that actually drive them. Working capital, debt, tax, capital expenditure and equity each have their own schedule, and the cash flow statement is derived from them rather than typed in. Change a driver and the effect flows through profit, tax, working capital, debt and closing cash.

We build these models for Australian small and medium businesses, their directors and their advisers, in Excel, with a documented assumptions sheet and a structure your team can maintain. Where a short-term liquidity view is needed, a 13-week rolling cash flow forecast is built inside the same model rather than kept as a separate file.

A valuation is one use of the model. If you need a defensible valuation on top of the structure, that is built from the same forecast: see business valuation services.

What we build

What is included in an integrated model

Deliverables are agreed at scoping, so the model matches the decisions you need to make.

3-statement model (P&L, balance sheet, cash flow)

Profit and loss, balance sheet and cash flow statement built as one linked structure, so the three statements agree by construction rather than by manual adjustment.

13-week rolling cash flow forecast

A weekly cash view for the next quarter, drawn from the same model. Used for liquidity management, lender conversations and seasonal planning.

Driver-based revenue and cost build

Forecasts built from operating drivers such as price and volume, customer numbers, headcount and unit costs, so each assumption can be traced and changed.

Debt and interest schedule

Facility-by-facility drawdowns, repayments, interest and closing balances, with covenant headroom such as gearing and debt service coverage tracked in the model.

Working capital and capex schedules

Debtor, creditor and inventory days feeding the cash flow, plus capital expenditure and depreciation schedules that keep the balance sheet consistent.

Scenario switch and sensitivity

Base, upside and downside cases switched from one input, with sensitivity tables showing how cash and profit move when the key drivers change.

Assumptions sheet and model documentation

A single input sheet with protected assumptions, colour conventions and a documented structure, so the model can be handed over and maintained internally.

Board-ready outputs

Monthly, quarterly and annual summaries, cash position charts, KPI pages and a one-page cash summary you can take to a board, bank or investor meeting.

Why it matters

What an integrated model gives you

Statements that agree by construction

The balance sheet balances and the cash flow statement ties to the cash balance because the model is built on linked schedules, not formulas typed over the top of each other.

Assumptions you can see and change

Every driver sits on a documented assumptions sheet. Change one input and the impact flows through profit, tax, working capital, debt and closing cash.

Scenarios without rebuilding

Compare base, upside and downside cases in the same file, with sensitivity analysis on the drivers that matter most to your business.

Lender and investor ready

Banks, investors and boards expect an integrated three-statement view, with debt schedules and covenant headroom visible. The model is built to that standard.

Maintainable after delivery

Models are structured so your team can update actuals, roll the forecast forward and add scenarios without breaking the links.

One model, several answers

Budgeting, cash forecasting, funding applications, capital decisions and valuations all run off the same structure, so the numbers stay consistent.

Who needs this

Common reasons to commission one

Businesses that need the three statements linked in one model for board or investor reporting
SMEs preparing a bank funding or refinancing application that requires an integrated forecast
Growing businesses moving from a spreadsheet budget to a driver-based rolling forecast
Directors testing hiring, pricing, capex or expansion decisions before committing
Companies running scenarios for seasonal peaks, contract wins or customer losses
Advisers and brokers who need a client model built to a consistent, reviewable standard
Businesses with debt facilities needing covenant headroom tracked alongside the forecast

If your need is specifically short-term liquidity, start with the cash flow forecasting service. If it is a number for a sale, dispute or capital raise, start with business valuation.

3-Way Financial Models: Making Better Business Decisions with Integrated Statements

Read article

FAQs

Frequently asked questions

What is a 3-statement financial model?

A 3-statement financial model links the profit and loss statement, the balance sheet and the cash flow statement in a single structure. The statements are connected through schedules for working capital, debt, tax and capital expenditure, so a change to one assumption flows through to profit, cash and the balance sheet at the same time. It is also called a 3-way model or an integrated financial model.

Is a 3-way model the same as a 3-statement model?

Yes. The names describe the same model: a 3-statement model (also called a 3-way, three-statement or integrated financial model) is one in which the profit and loss, balance sheet and cash flow statements are linked. Firms, industries and countries use different wording for it, and the underlying structure does not change.

What is the difference between a 3-statement model and a DCF valuation?

A 3-statement model projects the business: profit, balance sheet and cash over time, driven by operating assumptions. A DCF valuation uses those projected cash flows to produce a present value, so the model is the engine and the valuation is one output. That is why a defensible SME valuation is normally built on an integrated model.

How does a 3-way model differ from a cash flow forecast?

A cash flow forecast projects the timing of receipts and payments, and can be built on its own. A 3-way model goes further by deriving the cash flow from the profit and loss and balance sheet, so profit, tax, working capital, debt and cash all reconcile to each other. A 13-week rolling cash forecast is often built inside the 3-way model for short-term liquidity.

What information do you need to build one?

Recent financial statements or a trial balance, the operating drivers behind revenue and costs, the debt facilities with their terms, and any known commitments such as leases, capex plans or hiring. Where historical data is incomplete, we work from management figures and note the assumptions used.

Can my team maintain the model after it is built?

That is the intent. Assumptions sit on a single documented sheet with input protection, calculations are separated from inputs, and the model is handed over with a short walkthrough so your team can update actuals, roll the forecast forward and add scenarios.

Need a 3-way model you can maintain?

Tell us the decisions the model has to support and we will scope the structure, the scenarios and the outputs around them.