Chapter 25Budgeted Balance Sheet and Integrated Three-Statement Plan

Connecting the approved P&L, capital plan and cash flow into a complete monthly financial position

The earlier chapters have already produced revenue, expense, labour, GOP, below-GOP charges, capex and cash schedules. This chapter does not rebuild them. It maps their closing effects into one monthly balance sheet, tests Assets = Liabilities + Equity and creates the owner and lender ratios required for approval and forecast review.

Learning outcomes

• Reconcile an approved opening balance sheet and assign every balance to an owning schedule.
• Build monthly current asset, fixed asset, liability, debt, provision and equity roll-forwards.
• Connect P&L, cash and balance-sheet movements without double counting.
• Enforce a zero balance-sheet difference and calculate owner/lender ratios on named definitions.
• Stress collection, inventory, capex, funding, debt, distribution and tax assumptions.

1. Start from an approved opening balance sheet

The first month cannot be calculated from the P&L alone. Finance begins with a closed, reviewed opening balance sheet tied to the statutory ledger and maps every material balance to an owning roll-forward. Unreconciled opening differences remain explicit; they are not buried in the forecast.

The model records account, reporting basis, opening amount, owner, source, reconciliation date and schedule. A management-reporting reclassification may be required, but the statutory opening remains identifiable.

2. Build current assets from operating schedules

Cash comes from Chapter 24. Accounts receivable follows billings, collections, write-offs and closing A/R. Inventory follows opening stock, purchases, consumption, adjustments and closing stock. Prepayments and deposits follow cash paid, expense release, additions and closing balance. Tax and other receivables follow their own legal and timing basis.