# Operating model

> Operating model — 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.

Source: https://lopifi.com/glossary/operating-model
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is 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 known as

- Three-statement model

## Words this system refuses for it

- budget spreadsheet
- P&L forecast (one statement)

- **Category:** Finance & planning
- **Specified in:** [Lexicon](https://lopifi.com/md/docs/domain/11-lexicon)
- **Related:** cash-flow-statement, retained-earnings, p-and-l, balance-sheet, statement, forecast