Financial Statements — Monthly [Overview]

Financial Statement: How to Understand FS-Month in Your Financial Model

When building a startup’s financial model, one of the most important outputs is your financial statement—the core monthly breakdown that helps you understand if you’re on the path to profitability.

This article dives deep into the FS-Month sheet from our financial model template, showing you how to read a financial statement, how each component connects with your company’s operations, and what matters most for founders tracking performance and runway.

What is a Financial Statement?

A financial statement is a structured summary of a business's financial performance. The FS-Month sheet includes three key sections:

1. Income Statement – Tracks monthly revenue, cost of goods sold (COGS), and SG&A.
2. Balance Sheet – Provides a snapshot of assets, liabilities, and equity.
3. Cash Flow Statement – Breaks down how money moves in and out of the business.
   

All these sheets pull their data from elsewhere in the model—you should never manually input values here. That’s a key principle of working with our financial statement template: values flow from where they’re generated.

Income Statement: Measuring Startup Performance

The income statement tells the story of your startup’s monthly performance. It includes:

• Revenue, pulled from the revenue sheet
• COGS, pulled from the cost sheet
• SG&A, pulled from its own tab
• Taxes, pulled from the tax module
• Capital expenditures, where applicable
  

Since this sheet connects directly to growth projections, taxes, and even your dashboard, always update the original input sheets rather than adjusting numbers directly here.

Balance Sheet: Understanding Assets and Liabilities

The balance sheet is a snapshot of your business’s financial health.

Key components include:

• Assets (cash, inventory, equipment)
• Liabilities (debt, accounts payable)
• Equity (retained earnings and investor capital)
  

For example, equipment purchases show up as long-term assets, while loans are listed under liabilities. Manual inputs are allowed for rare items like inventory or prepaid expenses, but in general, the sheet is auto-filled by the rest of the model.

Cash Flow Statement: How Cash Moves Through Your Business

The cash flow statement has three sections:

• Operating Activities – Net income, depreciation, and working capital
• Investing Activities – Purchases of capital assets like laptops
• Financing Activities – Loans and funding rounds
  

This is where you’ll start modeling your startup's cash runway and figure out how long you can operate before needing additional capital.

A Financial Statement Example: Projections in Action

Let’s say your startup launches in November 2023. Before then, you’ll see several months of negative net income and EBITDA. This is expected. As the model populates with your projections:

• Revenue begins to appear
• Costs are auto-calculated
• Depreciation shows up from equipment purchases
  

The model adjusts the monthly cash position automatically, calculating:

• Starting cash
• Incoming cash
• Ending cash balance
  

This provides a clear monthly view of how your financial statement evolves over time.

Funding and Cash Strategy

If you’re planning a funding round, this is where things get strategic.
You’ll see how much capital you need to inject to cover your cash dip.

For example:

• $350,000 might give you runway until October
• $750,000 might get you to March, after your product launch
• At that point, you’re in a better position to raise a seed round
  

These assumptions affect your cap table, equity, and dilution—automatically calculated in the model.

Planning Your Next Round

The FS-Month sheet allows you to simulate scenarios:

• Add a $2.25M seed round
• Adjust salary assumptions
• Delay hires
  

This allows you to optimize for capital efficiency and better runway planning—things that are crucial in the early stages of a startup.

Long-Term Financial Health and Taxes

Convertible notes, interest, and tax liabilities are also modeled here:

• Notes are liabilities until converted to equity
• Interest gets automatically accrued
• Income taxes are modeled monthly and paid annually
  

All of these elements affect your final ending cash balance, which is the single most important number for your business’s survival.

Use the dashboard to monitor how much runway you have left and when you’ll reach profitability.