From the course: Excel for Finance: Building a Three-Statement Operating Model

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Forecast the income tax expense

Forecast the income tax expense - Microsoft Excel Tutorial

From the course: Excel for Finance: Building a Three-Statement Operating Model

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Forecast the income tax expense

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- [Instructor] So now that we've finished up modeling our G&A expenses, let's go one layer deeper below the line, so below our operating income to our income tax expense. Our operating income, just for reference, is the gross profit minus all of the G&A expenses that we just modeled. Our tax expense is held somewhere else in the business because it's not part of core operations, it's just the required cost of running a business. And like we talked about in the EBITDA video, we are modeling a C corporation, a home goods manufacturer, and so they are going to have an income tax expense on their income statement. Now, taxes are paid quarterly, at least in the US, basically, there are four payments a year, so we need to accrue an expense each and every month, and then we model out the balance sheet portion of this, which is down here, the tax accrual, we will show the correct cash impact of this expense. Right now we are just…

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