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Two Hour Financial Model is an excel-based template and series of videos that will help you learn to create a financial model quickly. For students, entrepreneurs, CFOs, and business owners. Checkout our website and Udemy video series.
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TwoHourFinancialModel.com
Financial Statements
TwoHourFinancialModel.com
FINANCIAL STATEMENTSThe simplified version
TwoHourFinancialModel.com
The financial statements
Balance Sheet
Cash + other Assets = Total
Assets
Liabilities (Debt)Shareholder’s
Equity
Cash Flow Statement
Cash from:
OperationsInvestingFinancing
Income Statement
Revenue – Expenses = Net
Income
Balance Sheet
Cash + other Assets = Total
Assets
Liabilities (Debt)Shareholder’s
Equity
TwoHourFinancialModel.com
Income Statement
Profits from operating the business
Not necessarily cash flow, but usually close
Doesn’t have: Cash flow, cash balance!
Revenue 100
- COGS 50
Gross Profit
50
- Overhead Costs
20
EBITDA 30
- Interest 1
- Tax 10
- Depreciation
1
Net Income 18
TwoHourFinancialModel.com
Income Statement ex: Google
TwoHourFinancialModel.com
Balance Sheet
Assets = Liabilities + Equity
TwoHourFinancialModel.com
The balance sheet, simplified
Assets = Property owned by the company, including cash
Liabilities = Debt, short-term and long-termEquity = Investment in shares of the company
TwoHourFinancialModel.com
Cash Flow Statement
Links the balance sheets
New cash from investment is shown on the cash flow statements
TwoHourFinancialModel.com
Timing
The balance sheet is a snapshot at a single point in time
The income and cash flow statement explain changes between balance sheets
TwoHourFinancialModel.com
Exercise
Look at the financial statements for the following companies in different industries:
FacebookGeneral ElectricFordBPMicrosoft
Then, fill out the table on the following slide.
TwoHourFinancialModel.com
Financial statements exercise
FB GE Ford BP MSFT
Revenue ($) 86.8
COGS26.9
(31%)
Gross Profit59.9
(69%)
Overhead Costs (SG&A + R&D)
32 (36.8%)
Cash & ST Investments 85.7
Long term debt 20
Calculate the following totals for the most recent last 12 months.
Also, divide by revenue to calculate a percent ratio.
TwoHourFinancialModel.com
Financial statements exercise
• What did you notice?• Why do you think these companies
varied?
