Model is not balancing
building a pretty simple model for a discretionary name, but 3 statement model is slightly unbalanced. I've double checked all BS items linking to CF, D&A schedule, and signs, yet still can't find anything wrong. BS check is off by ~73 & doubling in yr2. I know I am missing something & I'm hitting my head against the wall trying to figure this out. Any help on what to check or common mistakes would be appreciated.
If the error doubles every period that means a recurring cash flow item is wrong. Are signs on your capex, d&a wrong? Are signs on working capital changes wrong?
If you screenshot model happy to look deeper
can you pm? would love to send over screenshots to get your thoughts
Walk through all of your balance sheet changes period to period and make sure the cash flow is capturing it properly. Also make sure you are tying all of the equity / stock buyback / etc. changes.
One quick way that sometimes works is to manually change each line item by a set amount and then see if everything / your check equation changes by that amount. When you change one line item and everything doesn't change, you have found the issue
Can you expand on this?
If there's one line item that if removed, doesn't change the numbers, how do you know that this is the row that's throwing off your model
It could help you identify the line item that is not linked properly (if I increase these asset line items by 100 each I should see the check line item move by 100, when it doesn't then I know I didn't link that line). Or it could show you where you reversed a sign (make sure it moves in the right direction for each change). Also you can track the changes through the cash flow statement as well. as you should see like for like changes there. You can also do changes in general and pretend it is like that interview question "walk me through the changes when I move x by 10". Anyways, changing a line and auditing the change has been helpful when I have these problems in the past - I didn't do IB and learned modeling on my own though so others may have better advice.
Generally, I would note the following when it comes to balancing:
Working Capital: To make sure change in balance sheet items are reflected in the CFS (with the right signs)
Capex & Depre: Ensure that Capex is added on to PPE, with equivalent amount in investing section of CFS. Depre added back to CFS as non-cash adjustment while factoring to income statement (which links to equity) and accumulated depreciation
Dividends: If dividend paying, to ensure that it's in CFS, while deducted from retained earnings
If the B/S check is off by not the same figure but changing numbers for every year, odds are there's a mistake in the whole linkage and I'd say to re-look the few things I mentioned earlier. Hope it helps!
Restricted cash?
https://www.wallstreetoasis.com/forum/investment-banking/cash-and-cash-…
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