Forecast 3-statement model is crucial to an LBO model. In the balance sheet, we'll see how much debt we've got, and in the income statement, we'll see how much interest we're paying. That reduces the cash, and we can see that cash being forecasted in the balance sheet and the cashflow statement, and we use that to pay off the debt. So having a forecast 3-statement model is crucial. We'll be doing it here in the Deal_Model tab, and we'll be working in column J. This is our first full year after the stub period. We'll start up in the calculation section. We need to do our PP&E forecast, 'cause we'll need depreciation. We need to do intangibles for amortization, et cetera. So we start with my beginning net PP&E. That's last year's ending. But the CapEx I can get from the standalone model. If I scroll up into the calculation section, and in column J, there's the CapEx for the full year. I can then copy that down, and depreciation comes as well. Our ending figure is the sum of the items above. I can do exactly the same for intangibles. For amortization, I go to the model tab, and I find amortization in column J.

Let's do equity while we're here. So my beginning equity's last year is ending and net income and dividends will come from this income statement. We haven't filled it in yet, but let's link to the empty cells while we're here.

Great. So we now move onto the income statement proper. And again, sales comes from the model tab. I link to column J, that's the December '19 period, 3,088.6.

Now, I can copy that down for EBITDA, but we've also got an EBITDA improvement. I'm going to add onto this. A figure we've got at the top of this page is the EBITDA margin improvement of 0.5%. So I'll multiply that by the sales and we can see EBITDA's gone up to 250.

Depreciation and amortization we just calculated. So let's grab them from the calculation section, which then gets us to EBIT.

Now, our historical finance charge, that's not going to happen anymore. That was in the standalone model. We'll get rid of it. We initially had a hard coded zero in the Deal_Date tab, so we're just gonna link to the previous year. We'll keep it at zero, but the remaining items, amortization of OID, the interest, we'll leave them blank until the model is finished. So my profit sums up all of those and the EBIT.

And I can now calculate tax but I'm not going to use the figure from the Model tab. Now we've included lots of interest, the figure's going to be quite different. So instead I'm going to use the effective tax rate on this tab, 21%, but I'll multiply that by our new profit before tax, at the moment, 141.6.

My net income then sums up profit before tax and tax expense. And lastly, my dividends. We're going to assume no dividends been paid out at all in this LBO. So I'm going to link back to the previous year's zero. We need to be careful that tax expense there of 29.7, that should be a negative. So I'll times that by minus one.

Fantastic, getting me down to net income of 111.9.