Assets & Financing Model

Separate investment from funding

An investment plan describes what the business acquires, when it is brought into use and how long it supports operations. A financing plan describes how cash is raised, serviced and repaid. Keep them as separate schedules: borrowing to buy machinery does not turn loan proceeds into revenue or the machinery purchase into an operating expense.

This pillar develops those schedules. The Three-Statement Model owns the complete integrated forecast, the financial forecast workflow organizes the wider planning process, and the Operating Model develops revenue and profitability. Use their operating assumptions as inputs here.

Capex becomes assets, then depreciation

Start with opening PP&E and a time-based investment plan. Closing PP&E equals opening PP&E plus additions, less depreciation and carrying-value disposals. The Capex Model develops replacement and expansion assumptions; the Depreciation Model allocates each addition over its useful life.

The preview starts with EUR 300,000 opening PP&E and three years of remaining life. New machinery additions are EUR 100,000 in 2026 and EUR 150,000 in 2027, each with five years of life and a half-year first charge. Depreciation is EUR 110,000 and EUR 135,000; closing PP&E is EUR 290,000 and EUR 305,000. These are illustrative planning conventions.

Debt changes cash; interest changes earnings

A draw raises debt and cash. Repayment reduces both; neither principal movement is an operating expense. The Debt Model forecasts opening principal, draws, repayments and the rate applied over time. The interest implementation reference explains which source supplies expense when overrides are active.

In the same preview, a EUR 100,000 draw on 1 July 2026 raises debt from EUR 200,000 to EUR 300,000. A EUR 50,000 repayment on 1 July 2027 leaves EUR 250,000. The Advanced schedule charges 5% over the actual intervals, producing about EUR 12,521 and EUR 13,740 interest. A year-end annual borrowing assumption has a different timing convention.

Reconcile each decision through cash flow

A cash purchase appears in investing cash flow. Borrowing and principal repayment appear separately in financing cash flow; modeled cash interest affects operating cash flow. Depreciation lowers EBIT but is added back in the indirect reconciliation because the charge itself is non-cash. It does not cancel the original investment payment.

Closing cash combines opening cash with all operating, investing and financing flows. The preview cash balance also includes operations, modeled taxes and annual distributions; it is not the isolated capex effect. Use the cash-flow presentation reference and cash and explicit funding reference to trace movements.

Distributions connect cash and retained earnings

A cash dividend distributes earnings; its payment itself does not reduce EBIT or current-year net income. It reduces cash and retained earnings through financing cash flow. With no capital contributions or other equity movements, closing equity equals opening equity plus net income less distributions. The preview includes EUR 50,000 distributions each year.

An earnings-based payout does not establish available cash after investment and debt service. Compare the dividend transaction effects and equity and distribution controls. An automatically modeled revolver identifies required financing, not a lender commitment.

Review schedules before reading totals

Reconcile starting balances to the opening financial position. Check that additions reach PP&E and investing cash flow once, D&A reaches EBIT and the add-back once, and principal movements agree with financing flows. Inspect interest-source ownership before assuming that a debt change must alter expense automatically.

The capex statement-effect guide and borrowing and repayment guide isolate a transaction. The What-If reference documents its separate, fixed conventions; a one-off comparison does not replace a recurring asset or loan forecast.

Build the schedules in the financial model

Open the model above to enter your own starting balances and investment or financing assumptions. The Capex and PP&E reference documents asset controls; the debt reference documents named loans and supported dated movements. Review the same scenario across earnings, assets, debt and cash.