Hi all,
New monkey here - I've been getting a lot of valuable advice from the WSO community and I hope I can build my career further and give back one day. Thank you Patrick!
I have a quick question on 3 financial statement modeling.
It seems like for modeling tests (for lateral hires) candidates are often asked to 'build an operating 3 statement model from scratch', after being given 10K / Qs and annual reports. I've been practicing this lately (I am not actively looking but I want to feel comfortable doing this, since my understanding is that this is what is expected of a first/second year analyst) but always run into a problem where I find items that don't fall into the usual category of what I expect to see in a BS / CFS. For instance, Pfizer has 'benefit plan contributions in excess of expense' and 'loss on sale of XXX assets' in the BS and Nike has 'Tax payments for net share settlement of equity awards' in the CFS.
I understand that due to time constraint and limited information I am supposed to 'bundle' some accounts and link the BS and CFS together (and I understand how to do this once I bundle the items), but I am not sure which ones I should bundle as 'other' (and keep it constant / 0, I suppose?). Because I don't know which of these rogue items in the CFS affect which item / items in the BS, I cannot decide on which to bundle and which not to, and my model would never balance as a result. Am I perhaps overcomplicating this?
I have searched around the forum / web to see if there is a good answer to the above but I was not able to find something particularly helpful.
Any help or advice would be greatly appreciated! (For those who have an example of an operating model that was built from scratch based on a 10-K, I would be very thankful it if you could please share the file through DM)
My get MSed but on model tests unless I can create a supporting schedule for a BS item or its a NWC item (AR/AP/INV) then I usually group them into "other current/noncurrent assets/liabilities" and hold them constant.