Together they show in details all that is happening financially in a company. When evaluated over the past years they shed light on management strategy and performance. When projected into the future, they show what the company is worth. And these are the entirety of what Financial Modelling is about.
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The Income Statement is a record of the company's revenue and expenses over a specified period, usually a year, half year or a quarter. And for Financial Modelling, you will be concerned more about the year one.
The Balance Sheet is the record of the company's Assets, Liabilities and Equity at a particular point in time. So you'll usually see it written as Balance Sheet as at 31 December 2015.
The Cash Flow Statement is the record of cash inflow and cash outflow of a company within a specified period. Again, for Financial Modelling we care more about one year period.
If you looked at the screenshots of the Income Statement, Balance Sheet and Cash Flow Statement I inserted above, you will notice that they look different slightly from how companies outline theirs in their annual reports. It's deliberate and the usual case for all financial modelers. Mine are standardized to work for all companies (regardless of their industry) and optimized for forecasting (which is an important piece of Financial Modelling). In fact, the very one I posted above is what I use in teaching DCF Financial Model. DCF stands for discounted cash flow. That is why I have a line called UFCF (unlevered free cash flow) in the Cash Flow Statement.
Again, don't worry about the words you don't understand now. I will explain them in-depth in the future posts.
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