Balancing Financial Statement Models - How much is acceptable? companies, mistakes, believe, equity

burning0spear

Hello,

I've done 3 year forecasts for two companies and both of em have an unbalanced asset/equity. For all 3 years, each is off no more then 1% of equity.. (Ie, Equity is 1000 and A=2000 L=1010). I've spent some time checking and don't believe I've made any mistakes, probably just forecasted to much growth for certain liabilities (well maybe thats a mistake!)

Is there a certain % where its just, you know, not cool?

thank you!

RMontgomery

Check your formulas for stuff that's linked to cash flow statements, especially working capital items. Maybe there's an incorrect formula, and/or you forgot to link one of these items to your statements of cash flows.

mp3bu

It's fine as long as you put "balancing" in quotes, or footnote it with "good enough for investment banking use" or similar.

fishmarket

Isn't retained earnings used as a plug anyway? Or at least that's what I thought.

NO EXCUSES

RoastBeef

daddybackstab Wrote:
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> I've spent some time checking and don't believe
> I've made any mistakes,


Yes you have, keep checking.

numi is probably right. whenever my models don't tie out, it's usually something like the change in a WC item should be added instead of subtracted

dreampak

All corretly built models SHOULD balance. If it doesn't, you have made a mistake. Don't use plugs because you are just cheating yourself into thinking it is built correctly.

One trick is to check the differential balance over a few forecast years. If it stays constant, likely you just forgot to add items to your cash flow statement for one single year. If the differential balance changes over time (check at what rate each year), it is likely income statement/working capital related.

mdfb79

Is there a certain % where its just, you know, not cool?

<> 0%

yuoska

just want to let everyone know i figured out the mistake a couple days ago at ihop. its balanced. thank you guys for responding, I really do appreciate it.

cv4cfa

daddybackstab Wrote:
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> just want to let everyone know i figured out the
> mistake a couple days ago at ihop. its balanced.
> thank you guys for responding, I really do
> appreciate it.

international house of pancakes?

cityboy

i love ihop