3-Way Financial Modelling

Financial clarity is the key to business growth, stability, and profitability. 3-Way Financial Modelling allows business owners to forecast performance by integrating operating, investing, and financing activities into one cohesive model. By connecting the Income Statement, Balance Sheet, and Cash Flow Statement, you gain a complete, accurate view of your company’s financial health- today and into the future.

This model is an essential tool for making strategic decisions, managing risks, and preparing for growth, acquisitions, or capital raising.

Why 3-Way Financial Modelling is Critical

Many business owners struggle to make fully informed decisions because they don’t have a single, integrated view of their finances.

A 3-Way Financial Model:

Provides robust insights into your future financial position: understand how each decision impacts profitability, liquidity, and solvency.
Gives confidence about cash positions: forecast cash inflows and outflows to ensure you can pay employees, suppliers, and creditors on time.
Future-proofs your business: identify potential risks, bottlenecks, and opportunities before they become major issues.
Helps attract investors and lenders: a comprehensive model demonstrates credibility and planning capability.
Supports strategic decision-making: test different scenarios such as pricing adjustments, cost reductions, or new investments to see their effects on the business.
Optimises resource allocation: plan where to invest in people, technology, and equipment for maximum ROI.

Financial Modelling

What You Need to Build a 3-Way Financial Model

A complete 3-Way Financial Model relies on three interconnected financial statements:

1. Income Statement

Tracks revenue, costs, and profitability
Identifies trends and growth rates
Forms the basis for forecasting future profits

2. Balance Sheet

Shows assets, liabilities, and equity
Reveals capital requirements and investment needs
Highlights funding gaps or excesses

3. Cash Flow Statement

Monitors cash inflows and outflows
Ensures operational stability and liquidity
Projects cash availability months or years into the future

By linking these three statements, your model provides a full picture of your business, allowing you to confidently plan and act.

Cashflow Services

How PGH Corporate Guides You Through the Process

Building a 3-Way Financial Model is about translating data into actionable insights. At PGH Corporate, we help you every step of the way:

Step 1: Input Historical Financial Information

We start with accurate historical data from your income statements, balance sheets, and cash flow statements. This baseline allows us to identify trends, seasonality, and performance drivers.

Step 2: Define Key Assumptions

Assumptions are the foundation of forecasting. We work with you to define:

Revenue growth and market demand
Cost of goods sold and operating expenses
Capital expenditures and depreciation
Financing costs, interest rates, and loan structures

Step 3: Forecast the Income Statement

We project future revenue, costs, and profits based on your assumptions. This helps you understand how operational decisions will affect your bottom line.

Step 4: Forecast Capital Assets and Balance Sheet

We model the impact of capital investments, loan repayments, and equity changes on your balance sheet. This ensures your resources are sufficient to support growth.

Step 5: Complete the Cash Flow Statement

By combining the income statement and balance sheet, we forecast your cash inflows and outflows. This identifies potential shortfalls and allows you to plan for seasonal fluctuations or unexpected expenses.

Step 6: Analyse Results & Build Action Plans

Finally, we interpret the model to provide actionable insights:

Where to cut costs or invest
How to optimise pricing or sales strategies
Opportunities for growth or expansion
Risk mitigation strategies for potential cash flow or operational issues

Financial Modelling

Benefits of Working With PGH Corporate

Integrated Planning: We connect operational, financial, and investing decisions for a complete picture.
Confidence in Decision-Making: Know how each decision will impact cash, profitability, and long-term growth.
Risk Reduction: Identify issues before they become critical and protect your business from unexpected shocks.
Attract Investors & Lenders: Demonstrate professionalism and credibility with a robust, transparent model.
Strategic Clarity: Turn complex financial data into a clear roadmap for growth and profitability.