For this example, we will assume that there is a business which:
Let us assume that the forecast of the Income Statement of the business is as follows:
A Cash Flow Statement can also be created, noting that (with the simplifying assumptions above), the cash flow is the same as the Profit.
The Cash Flow Statement can be used to create a corkscrew, which calculates the ending period cash balances (row 14), and using the assumption for the base case that the ownere has put in $150 of cash initially (so that the starting balance for cash in period 1 is $150, which is captured as a carry-forward amount):
The Profit from the Income Statement can also be used as an input into a corkscrew for the balances of Equity, noting that the initial equity is the $150, corresponding to the owner’s injection of cash (which therefore creates an equity liability of the business to its owner):
As a final step, the Balance Sheet is created. In this case, the Assets are cash only, and the Liabilities are the Equity only:
The Balance Sheet balances, as can be seen from the figures in row 22 and 24, and confirmed by the check in row 26. This logical check returns TRUE if the items in row 22 are the same as those in the corresponding columns of row 24.
Finally, as can be seen from the formula display in column J, all the formulas use only simple arithmetic or are direct references to other cells. In particular, there are no Excel functions used or required.