Module VI· Three-Statement Model MechanicsBasic
Question
Which income statement items do you intentionally leave out in the first build?
Answer
In a first-pass model, leave out complex items such as detailed interest, unusual gains / losses, minority interest, pensions, detailed tax attributes, and non-recurring items. Build a clean operating forecast first: revenue, COGS, SG&A, EBITDA, D&A, EBIT, tax, and net income. Add complexity after the model balances.