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Balance Financial Statements: The Flow

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Balance Financial Statements: The Flow

This course is part of Cells, Formulas, and Finance: Excel for Financial Analysts Specialization

Instructor: LearningMate

Included with

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3 modules

Gain insight into a topic and learn the fundamentals.

Advanced level

Recommended experience

3 hours to complete

Flexible schedule

Learn at your own pace

3 modules

Gain insight into a topic and learn the fundamentals.

Advanced level

Recommended experience

3 hours to complete

Flexible schedule

Learn at your own pace

What you'll learn

Construct a dynamic, integrated three-statement model by correctly linking the Income Statement, Balance Sheet, and Cash Flow Statement.

Skills you'll gain

Tools you'll learn

Microsoft Excel

Details to know

Shareable certificate

Add to your LinkedIn profile

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This course is part of the Cells, Formulas, and Finance: Excel for Financial Analysts Specialization

When you enroll in this course, you'll also be enrolled in this Specialization.

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Gain a foundational understanding of a subject or tool
Develop job-relevant skills with hands-on projects
Earn a shareable career certificate

There are 3 modules in this course

Balance Financial Statements: The Flow is an intensive intermediate course for aspiring financial analysts and business professionals who need to master how a company’s financial story is told through data. This course moves beyond theoretical accounting to teach you how to build a dynamic, interconnected three-statement financial model from scratch. You will master the critical mechanics of linking the Income Statement, Balance Sheet, and Cash Flow Statement, ensuring your model functions as a coherent, self-balancing system rather than a collection of static numbers.

Central to this course is the concept of "the flow"—understanding exactly how Net Income acts as the primary bridge between operational profitability and changes in company value. Through hands-on exercises, you will apply professional cell-referencing techniques to create models that are both accurate and scalable for complex corporate environments. By analyzing real-world examples, such as Microsoft’s 10-K filings and cautionary tales like the JPMorgan "London Whale" error, you will see why a perfectly balanced model is the non-negotiable bedrock of credible financial analysis. By the end of this course, you will be equipped to construct a professional-grade financial model that proves its own integrity. You will leave with a robust, interconnected framework ready for real-world forecasting, valuation, and strategic decision-making.

Module details

This foundational module lays the critical groundwork for financial modeling by answering the essential "why" and "what." We begin by exploring the catastrophic consequences of a simple modeling error through the real-world case of the JPMorgan "London Whale," establishing why a perfectly balanced model is non-negotiable in professional finance. From that cautionary tale, we move to the core theory, systematically mapping the "golden triangle" of connections between the Income Statement, Balance Sheet, and Cash Flow Statement. You will learn precisely how Net Income fuels Retained Earnings and serves as the starting point for cash flow, and how non-cash charges like depreciation are treated. The module is designed to build a strong conceptual framework before you even open Excel, ensuring you understand the logic behind the numbers. It culminates in a hands-on activity where you will articulate these connections, followed by a formative quiz to solidify your understanding.

What's included

2 videos2 readings2 assignments

2 videosTotal 13 minutes

The High Cost of a Simple Error: The London Whale Story7 minutes
Tracing the Flow: From Net Income to Retained Earnings and Cash6 minutes

2 readingsTotal 17 minutes

The Three Financial Statements (Corporate Finance Institute)7 minutes
Tracing the Complete Flow: Transactions and Non-Cash Charges10 minutes

2 assignmentsTotal 25 minutes

Hands-On Learning (HOL): Drafting an Explanatory Email to a Supervisor15 minutes
The "Closing the Books" Challenge10 minutes

This module transitions from conceptual understanding to practical application, focusing on the specific Excel techniques required to bring a three-statement model to life. You will learn why dynamic, formula-driven models are superior to static, hard-coded ones, and how to build a robust and auditable spreadsheet. Through a carefully sequenced series of illustrated readings and "follow-along" screencast videos, you will perform the essential linking procedures step by step. You will learn to connect Net Income to the Retained Earnings schedule and the Cash Flow Statement, trace depreciation from the income statement to its impact on assets and cash, and perform the final, crucial link of the ending cash balance back to the Balance Sheet. The module reinforces these procedural skills with an AI-powered coaching dialogue and a hands-on exercise before testing your ability to apply them in a practical, scenario-based assessment.

What's included

2 videos3 readings2 assignments

2 videosTotal 10 minutes

The Core Principles of Dynamic Linking6 minutes
Link Depreciation Across the Statements5 minutes

3 readingsTotal 21 minutes

The Risk of Static Models vs. Dynamic Models7 minutes
Illustrated Guide: Linking Net Income7 minutes
Illustrated Guide: The Final Link - Ending Cash7 minutes

2 assignmentsTotal 25 minutes

Hands-on Learning (HOL): Describing the Linking Sequence15 minutes
The Forensic Audit Challenge10 minutes

In this final module, you will learn the skills that separate an amateur from a professional modeler: validation and troubleshooting. The focus is on achieving the "moment of truth"—a perfectly balancing Balance Sheet—which serves as the ultimate proof of your model's integrity. We will equip you with a systematic process for "auditing" your own work and diagnosing common errors, such as flipped signs, broken links, or incorrect ranges. You will learn how to troubleshoot like an expert through a practical screencast and a guided coaching scenario. To bridge theory with real-world practice, you will also be guided on how to navigate a real company's 10-K report to see how these statements are presented and connected. The course culminates in a final graded assessment that validates your ability to not only build but also verify a balanced, reliable financial model from start to finish.