I recently decided to rerecord the video titled “Overview of the Process” in the Integrating Financial Statements series. This is in an effort to reduce the amount of material posted where I sound like a robot (unfortunately I still sound a bit like a robot…).
Whether you aspire to start a business, work in investment banking, or work on the buy side, a thorough understanding of the relationships between the three primary financial statements is critically important. For me personally, everything I had come to understand about accounting truly clicked for the first time in the process of building an integrated model. It may be biased (and I realize there are many different learning styles), but I believe it’s the best way to achieve this level of understanding.
Over time, and with enough practice, you will have the ability to make these calculations without looking at a model. If you are engaged in conversation about the future of any business, understanding how changes in the company’s operations will impact the balance sheet, and how that in turn will impact net income and cash flow, is invaluable.
Link to new video: Overview of the Process.