Operating model
In accounting, operating model means a forecast in which the income statement, balance sheet and cash flow statement are linked: profit flows to retained earnings, working-capital balances come from assumptions, and cash is derived from the cash flow — never typed — so the balance sheet balances by construction.
Also called Three-statement model.
Not a rule. FP&A convention — not codified. US GAAP governs recognition, measurement and presentation, not bookkeeping mechanics. Sources
The lesson that teaches this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- budget spreadsheet
- P&L forecast (one statement)
Components that render the terms it depends on
No component names this concept outright, but it's built from terms that components do name. These render cash flow statement, p&l, balance sheet, statement, forecast.
3Payments
Family spec- BankStatementOpening → lines with a running balance → closing, proven against the bank's own figure.
- LedgerTableDouble-entry with debit/credit columns and a balance check.
- PeriodGridThe ruled grid. Frozen panes, hidden columns, hover change, ⌘C.
- ReconciliationViewTwo-pane matcher. The match animation.
- TableColumnsSort and resize for a table that renders on the server.
- CashFlowStatementOperating / investing / financing.
- StatementTableThe shared shell: hierarchy, periods, rules.
- ProfitAndLossP&L with period comparison and variance.
- StatementOfChangesInEquityThe fourth statement. Equity components across, movements down.
- StatementToolbarBasis, period, comparison, currency, consolidation.
- BalanceSheetAssets / liabilities / equity, with the balance check.
- ReportHeaderEntity, statement, period, basis, currency, as-of. Every figure states its basis.
- StatementNotesNumbered notes, referenced from the line they explain.
- StatementRowIndent level, subtotal, total, expand.
- DrilldownSheetStatement line → the GL entries behind it.
- FluxAnalysisPeriod-over-period explanations.
- ReportingPackageA board or lender pack as one object: contents, basis, review state.
10Receivables (AR)
Family spec- PlByDimensionThe P&L cut by department, entity or product.
- MrrBridgeThe movement, not a single number with a percentage.
- NonGaapReconciliationEBITDA below net income, every adjustment named.
- ForecastTableProjections dashed and labeled everywhere.
- BudgetVsActualPolarity-aware, materiality-filtered, versions tracked.
- DriverModelThe inputs a forecast is built from, and what they produce.
- ScenarioCompareScenarios side by side, all measured against the base.
Also in Finance & planning
Defined in Lexicon. This page is generated from that document, so the two can't disagree.