Instructions on How to Use This "Interview Question" 3-Statement Model:

First off, note that this model can and will "break" under the appropriate conditions.
Unfortunately, due to the way Excel's data validation function works, it is impossible to error-check every single condition that might result in errors or weird numbers.

So stick to relatively standard numbers, make sure nothing too crazy happens, and focus on 1 or 2 changes at a time - those are, by far, the most likely interview questions anyway.

You'll see that MANY items on the Income Statement and Cash Flow Statement are $0 initially.
I've taught this material for years now, and I've seen repeatedly that it is MUCH more confusing to understand the changes when they're not $0 initially.
No, it's not realistic, but this exercise is all about conceptual understanding - and that is much easier when these items are $0 to begin with.

Most of these changes are modeled as INCREASES because that is how most interview questions are phrased.
If you really want, you can remove data validation and allow for decreases… at your own peril, because that can create problems.

A few notes / restrictions / comments on specific items here:

Income Statement Items:

Depreciation and Amortization: Make sure that these do NOT exceed the PP&E balance and the Other Intangible Assets number, respectively. Otherwise you'll get negatives, which makes no sense.
Interest Income and Interest Expense: Interest Income always needs to be positive, and Interest Expense always needs to be negative.

Gain / (Loss) on Sale of PP&E: Can be positive or negative. You MUST have an accompanying change in PP&E Sale Proceeds for this one to make sense. Otherwise, it's just a Write-Up or Write-Down.
Gain / (Loss) on Sale of ST Investments: Can be positive or negative. You MUST have an accompanying change in Sell Short-Term Investments for this one to make sense. Otherwise, it's just a Write-Up or Write-Down.

Goodwill Impairment: Must be positive because this is always an expense on the IS. This will directly reduce Goodwill, but produce a tax savings (in this simplified example - not necessarily in real life).
PP&E Write-Down: Must be positive because this is always an expense on the IS. This will directly reduce PP&E, but produce a tax savings (in this simplified example - not necessarily in real life).

Deferred Income Taxes: These MUST be less than the total Income Tax Provision for the year. So if total Income Taxes are $400 and you set this to $500, it won't make sense. Don't do that. These are a PORTION of the total taxes.

Balance Sheet Line Items:

These must all be positives. They are separated into Increases or Decreases for VERY specific reasons - because an Increase vs. a Decrease means something quite different for these.
Once again, don't enter number so big that you make these negative. If Inventory is $100 and you assume that it decreases by $200, that would not make any sense.

Cash Flow Statement Items:

Similar rules as above - these must all be positive. Purchases and Sales are separated because they work differently - Purchases represent cash outflows, and Sales represent cash inflows.
Some of these items may not have hard limitations - for example, you can assume a huge number for new share issuances.
But others DO have hard limitations - you can't sell off more PP&E than you actually have, for example - so be careful with the numbers you select.
3 Financial Statements - Interview Question Model
($ in Millions)

Assumptions & Model Output

Assumptions: Here's What Happens on the Statements…

Tax Rate: 30% Cash Changes By… $ -
Shareholders' Equity Changes By… $ -
Net Income Changes By…. $ -
Initial Cash Balance: $ 100 Assets Side Changes By… $ -
Liabilities & Equity Side Changes By… $ -
Balance Sheet Still Balanced? OK!

Interview Questions - Possible Scenarios, by Statement

Income Statement Line Items (COGS Handled via Inventory): Operational Balance Sheet Line Items: Cash Flow Statement Line Items:

Revenue Increases By: Accounts Receivable: Purchase Short-Term Investments Increases By:
Operating Expenses Increases By: Increases By: Sell Short-Term Investments Increases By:
Decreases By: Purchase Long-Term Investments Increases By:
Depreciation Increases By: Sell Long-Term Investments Increases By:
Stock-Based Compensation Increases By: Prepaid Expenses: Capital Expenditures Increases By:
Amortization of Intangibles Increases By: Increases By: PP&E Sale Proceeds Increases By:
Decreases By:
Interest Income Increases By: Dividends Issued Increases By:
Interest Expense Increases By: Inventory: Issue Long-Term Debt Increases By:
Gain / (Loss) on Sale of PP&E Changes By: Increases By: Repay Long-Term Debt Increases By:
Gain / (Loss) on Sale of ST Investments Changes By: Decreases By (This represents a COGS increase): Issue Short-Term Debt Increases By:
Goodwill Impairment Increases By: Repay Short-Term Debt Increases By:
PP&E Write-Down Increases By: Accrued Expenses: Repurchase Shares Increases By:
Increases By: Issue New Shares Increases By:
Deferred Income Taxes Increases By: Decreases By:

Accounts Payable:
Increases By:
Decreases By:

Deferred Revenue:
Increases By:
Decreases By:
Income Statement Balance Sheet Cash Flow Statement
Current Start of End of Current Current
Period Period Period Period
Before After Before After Before After
Changes Changes Assets: Changes Changes Operating Activities: Changes Changes
Revenue: $ 1,300 $ 1,300 Current Assets: Net Income: $ 700 $ 700
Cost of Goods Sold (COGS): 100 100 Cash & Cash-Equivalents: $ 100 $ 800 $ 800 Non-Cash Expenses & Other Adjustments:
Gross Profit: 1,200 1,200 Short-Term Investments: 100 100 100 Depreciation: - -
Accounts Receivable: 100 100 100 Stock-Based Compensation: - -
Operating Expenses: 200 200 Prepaid Expenses: 100 100 100 Amortization of Intangibles: - -
Inventory: 100 100 100 Deferred Income Taxes: - -
Depreciation: - - Total Current Assets: 500 1,200 1,200 (Gain) / Loss on Sale of PP&E: - -
Stock-Based Compensation: - - (Gain) / Loss on Sale of ST Investments: - -
Amortization of Intangibles: - - Long-Term Assets: Goodwill Impairment: - -
Plants, Property & Equipment (PP&E): 1,000 1,000 1,000 PP&E Write-Down: - -
Operating Income: 1,000 1,000 Other Intangible Assets: 200 200 200 Changes in Operating Assets & Liabilities:
Interest Income: - - Long-Term Investments: 100 100 100 Accounts Receivable: - -
(Interest Expense): - - Goodwill: 100 100 100 Prepaid Expenses: - -
Gain / (Loss) on Sale of PP&E: - - Total Long-Term Assets: 1,400 1,400 1,400 Inventory: - -
Gain / (Loss) on Sale of ST Investments: - - Accounts Payable: - -
Goodwill Impairment: - - Total Assets: $ 1,900 $ 2,600 $ 2,600 Accrued Expenses: - -
PP&E Write-Down: - - Deferred Revenue: - -
Pre-Tax Income: 1,000 1,000 Liabilities & Shareholders' Equity: Cash Flow from Operations: 700 700
Income Tax Provision: 300 300
Current Liabilities: Investing Activities:
Current Portion of Income Taxes: 300 300 Revolver (Short-Term Debt): $ 100 $ 100 $ 100 Purchase Short-Term Investments: - -
Deferred Portion of Income Taxes: - - Accounts Payable: 200 200 200 Sell Short-Term Investments: - -
Accrued Expenses: 200 200 200 Purchase Long-Term Investments: - -
Net Income: $ 700 $ 700 Total Current Liabilities: 500 500 500 Sell Long-Term Investments: - -
Capital Expenditures: - -
Long-Term Liabilities: PP&E Sale Proceeds: - -
Deferred Revenue: 200 200 200 Cash Flow from Investing: - -
Deferred Tax Liability: 200 200 200
Long-Term Debt: 100 100 100 Financing Activities:
Total Long-Term Liabilities: 500 500 500 Dividends Issued: - -
Issue Long-Term Debt: - -
Total Liabilities: $ 1,000 $ 1,000 $ 1,000 Repay Long-Term Debt: - -
Issue Short-Term Debt: - -
Shareholders' Equity: Repay Short-Term Debt: - -
Common Stock & APIC: 600 600 600 Repurchase Shares: - -
Treasury Stock: (100) (100) (100) Issue New Shares: - -
Retained Earnings: 300 1,000 1,000 Cash Flow from Financing: - -
Accumulated Other Compr. Income: 100 100 100
Total Shareholders' Equity: 900 1,600 1,600 Beginning Cash: $ 100 $ 100

Total Liabilities & Equity: $ 1,900 $ 2,600 $ 2,600 Increase / (Decrease) in Cash: $ 700 $ 700
Cash & Cash Equivalents: $ 800 $ 800
Balance Sheet Balanced? OK! OK! OK!