The final step in a three statement model is to put interest expense, or interest income, into the income statement. If we have a look in our income statements, we've still got those two line items empty.

However, when I put interest expense here into the income statement it's going to create a circular reference and I'd like to control that with a circular switch or a toggle, a zero or one that turns it on and off. So I'm going to write equals if, and then open brackets and then I'm gonna go to the info tab. And I can see I've got this circular switch of zero until N10. We've actually named that cell. So if I click on it, it says switch. That won't be in every single model you come across just in our files. I'm gonna say if the switch equals a one, value if true, so if the switch is on, what do I want to happen? But what I want is interest expense to come in. If I look at the historical figures, they're all negatives. So I'm just going to have to make that a negative. And now I'm going to scroll all the way down to the bottom line of model, find the interest expense figure. There it is 1730.6. So if the switch is a one, give me negative interest. Otherwise give me a zero, because we've got the circular switch off this is going to give me a zero, there it is. That's okay, we'll turn it on in just a moment. I want to do exactly the same for my interest income. So if the switch equals a one I don't need the negative this time 'cause interest income is a positive. I want to scroll down, find my interest income all the way down near the bottom, 992.8.

If the switch is not a one, I just want a hard coded zero, so I've got no circular.

Great, so those two numbers have currently come through as zero. Now, to get this working, what I need to do are two things. I firstly need to turn the switch on, which will then put a circular into this model. So let's go do that but it will cause a little bit of trouble. So I changed the circular switch here to a one, press enter. What's popped up is a circular reference warning. This is Excel saying, "Whoa, you've put a circular reference in here. Are you sure you wanted to do that?" Yes, that is exactly what I wanted. However, we need to do our second thing, which is we need to tell Excel to enable iterative calculations, i.e. allow circulars. So we'll go do that now. We'll go up to the top left-hand corner, press file. Then down in the bottom left-hand corner I'll press options, just off the bottom of the screen, click on the options.

And then I go to formulas and I click enable iterative calculations. If you're on a Mac, instead you'll go to Excel, preferences, then enable iterative calculations. Press okay, and those figures should now be working. And there they are. Fantastic. My negative interest expense has come through and my positive interest income has come through as well.

If you so wish, what you could now do is you could copy all of these figures to the right, make sure you copy them all to the right before you start analyzing them. Otherwise you get some very strange numbers. And then you can have a look at the full file to compare your numbers against ours. However, do beware, in the full file you'll have to make sure that you've got the circular switch turned on if you've also got the circular switch turned on in your file, otherwise, those numbers will be different and you need to make sure you have enabled iterative calculations so you can compare those numbers.