The three key tables: profit, cash and financing explained

Why three key tables?

Making money and having money: two quite different things. Yet many founders mix them up. Each idea is measured in a different table. A solid financial file therefore combines three key tables, and each one answers a precise question.

• The income statement answers the question: am I profitable?
• The cash flow plan answers the question: can I pay my bills on time?
• The financing plan answers the question: how do I fund the launch?

You read these three key tables together. On its own, each table tells only part of the story.

1. The income statement: am I profitable?

This table measures performance over a financial year. It sets income against costs to arrive at a result. Its logic follows a simple cascade.

• Revenue minus purchases and variable costs gives the gross margin.
• Gross margin minus fixed costs gives EBITDA.
• EBITDA minus depreciation gives the operating result.
• That result, after financial items and tax, gives the net result.

Among the key tables, this one answers a single question: does your activity create value? Still, a positive result does not guarantee cash in the account. Depreciation, for example, lowers the result without a single euro leaving the bank.

2. The cash flow plan: do I have cash?

This table follows the money that actually comes in and goes out. You build it month by month, at least for the first year. An invoice issued in January but settled in March therefore appears in January's result. Yet it only reaches your cash in March.

That timing gap explains why a profitable company can run short of liquidity. VAT can also amplify the effect, when you pay it over before the customer pays you. The cash flow plan thus answers a very practical question: can I pay my bills on time?

3. The financing plan: does my project hold up?

The last of the three key tables sets two columns side by side.

• Long-term needs: investments, working capital requirement, a safety buffer.
• Long-term resources: share capital, shareholder loans, bank loans, grants.

It answers the launch question: how will you fund the start? A balanced plan shows that resources cover needs. Ideally, it also keeps a margin to absorb slower sales.

How the key tables fit together

This is the decisive point. The three key tables share the same assumptions, and every figure flows from one to the next.

• Net result feeds cash and the equity shown on the balance sheet.
• A loan creates repayments in cash and interest in the income statement.
• An investment leaves cash, enters the balance sheet, then depreciates in the income statement.
• A longer customer payment term increases working capital, and therefore the funding need.

If a single link breaks, the totals no longer reconcile. A credit analyst spots it within minutes, and the file then loses its credibility.

Example: a January invoice settled in March

Take a fictional case to connect the key tables. An agency invoices a €12,000 assignment, excluding VAT, in January. The client pays at 60 days, so in March. In the income statement, that €12,000 counts in January. In the cash flow plan, it arrives in March, VAT included. Meanwhile, the agency pays salaries and rent. Its working capital need rises, while the financing plan must cover those two months.

The inconsistencies a banker notices

Some errors between key tables keep appearing in hand-built files.

• A different net result in the income statement and on the balance sheet.
• A loan with no repayments in the cash flow plan.
• Investments with no depreciation.
• Closing cash that does not match the balance sheet.
• Rising sales with no increase in working capital.

To prepare for that meeting, also read our advice on how to win over your bank.

What about the projected balance sheet?

The balance sheet often completes the key tables. It captures assets and liabilities at year end: what the company owns and what it owes. In Belgium, the financial plan of an SRL or SA (limited companies) includes an opening balance sheet. It adds projected balance sheets after twelve and twenty-four months, as the Belgian Companies and Associations Code requires. Our guide to the mandatory financial plan explains those rules.

Let software link the figures

With Juristelo, you do not fill in three separate tables. You answer questions, then each answer flows into profit, cash and financing. As a result, the key tables stay consistent by design. To build the whole picture, also follow our seven-step method.