O'Reilly logo

Building Financial Models with Microsoft® Excel®: A Guide for Business Professionals, Second Edition by K. Scott Proctor

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 8. Consolidated Financial Statements

This chapter covers Napavale's consolidated financial statements: the Balance Sheet, the Income Statement, and Statement of Cash Flows. Many readers may be familiar with these financial statements as they are widely used to assess a business's financial condition and the SEC (U.S. Securities and Exchange Commission) requires publicly traded companies to file these financial statements on a regular basis.

As I covered the Balance Sheet in Chapter 7 and the Income Statement in Chapter 5, the majority of this chapter will be focused on the Statement of Cash Flows. I will, however, provide a review of the source of each line item in Napavale's Balance Sheet and Income Statement. By identifying the budget from which values flow into the Balance Sheet and Income Statement, I hope to provide some perspective on the interrelated nature of financial statements (and financial models in general).

BALANCE SHEET

The Balance Sheet, as noted in Chapter 7, presents a business's Assets, Liabilities, and Owners' Equity accounts. To be correct, a Balance Sheet must always "balance"—in other words, the value of a business's Assets must be equal to the value of that business's Liabilities plus its Owners' Equity. This, as you may remember, is also referred to as the central accounting identity (Assets = Liabilities + Owners' Equity). Figure 8.1 offers a view of Napavale's Balance Sheet as of the end of Chapter 7.

Figure 8.2 presents another view of Napavale's ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required