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Budgets and & Forecasts supports an integrated financial model known as 3-statement budgeting you can use to prepare for the future, make proactive decisions, and reduce risk.
The three statements
As the name suggests, 3-statement budgeting involves budgeting for three financial statements:
Profit and Loss (P&L or Income Statement) budget - : The expected value of your income and expenses over a specific period and therefore, a calculation of profitability. This budget displays in the Main tab of a financial budget workbook.
Balance Sheet budget - : The expected value of your assets, liabilities and equity at a point in time. This budget can be added as a new tab in the workbook.
Cash Flow budget - : The movement of cash (inflows and outflows) from operating, investing, and financing activities throughout the year to explain how you got from the start of your cash position to your end cash position. To put it simply, the Cash Flow shows where your money is coming from and what you are spending that money on. This budget is created automatically in a new tab when the Balance Sheet tab is added. Its values are entirely inferred; they are calculated automatically based on how the P&L and Balance Sheet move.
You actively budget for the P&L and Balance Sheet, and from those budgets, you derive your Cash Flow budget.
The 3-statement budgeting process
The following diagram illustrates the key steps in the 3-statement budgeting process, along with who is involved.
Save the main budget as a forecast, including the Balance Sheet and Cash Flow budgets.
On this page
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Related pages
For all budget users
For budget owners and administrators:
Add a Balance Sheet and Cash Flow tab (for 3-statement budgeting)