Practice · graded on a filing

Three-statement linkage — MSFT

Build it from MSFT’s latest annual filing. Every line you enter is checked by code against the filing.

What this drill asks

Derive the lines that link one filed statement to the next — gross profit from revenue and cost, operating income from gross profit and operating expenses, total equity from assets and liabilities. The model has to reconcile end to end. Every figure you are given comes from MSFT’s latest annual filing and is cited below; the assumptions are handed to you and are never graded. Nothing here is a view on the company.

Match the AI

You–/3

AI model3/3

An AI model worked this exact drill and got 3 of 3 lines right. Match it.

Claude Sonnet 5, given the same filed figures and stated assumptions you see, scored by the same grader. One run, on 2026-09-28, not retried. It does arithmetic on this filing only and never forms a view on the company.

Reconcile MSFT's model from the filed figures below (as of 2026-06-30). Derive each linked line to the dollar — the model must reconcile end to end.

Given (filed figures)

Revenue: $331,839,000,000
Cost of revenue: $106,374,000,000
Operating expenses: $70,228,000,000
Net income: $133,749,000,000
Total assets: $758,376,000,000
Total liabilities: $315,989,000,000

Derive the linked lines

Gross profit = Revenue − Cost of revenueOperating income = Gross profit − Operating expensesTotal equity = Total assets − Total liabilities

MICROSOFT CORP 10-K (FY2026, period ended 2026-06-30), accession 0001193125-26-323660, via SEC EDGAR · MICROSOFT CORP 10-K (period end 2026-06-30), accession 0001193125-26-323660, via SEC EDGAR

Educational use only — not investment advice.

In the interview

“How do the three statements link together?”

The 30-second answer

Net income from the income statement starts the cash flow statement and flows into retained earnings on the balance sheet. The cash flow statement's ending cash becomes the balance sheet's cash. And the balance sheet has to balance: assets equal liabilities plus equity.

Why it works: The statements are three views of one set of transactions. The income statement measures performance over a period, the balance sheet is a snapshot at its end, and the cash flow statement reconciles how cash moved between two snapshots.
The common trap: Treating gross profit or operating income as filed facts to copy rather than lines to derive, and missing that equity is the residual: assets minus liabilities, not a separate input.

The full mechanics · 4 steps

01Gross profit = revenue − cost of revenue.
02Operating income = gross profit − operating expenses.
03Total equity = total assets − total liabilities.
04Net income links the income statement to cash flow and retained earnings.

Comes up inIB first-round technicalsCorporate finance interviewModeling test

How this is graded

Revenue, cost of revenue, operating expenses, net income, total assets and total liabilities, as filed. Each cell is checked against the value the same pipeline derives from that filing, inside a small tolerance band, and the model has to reconcile end to end. There is no language model in the grade — it is arithmetic over filed figures, so it returns the same verdict every time. The correct values are not in this page: they are recomputed on the server when you submit, and your entries are read as a submission, never as the answer.

Every attempt ends in a review. Each line is marked Best, Inaccuracy, Mistake or Blunder by how far it is off, and the first line that went wrong is flagged, so an error carried through the rest of the model is fixed once, where it started.

Signed out, nothing is recorded: work it as many times as you like. Signed in, each graded attempt is saved to your account so your dashboard can track it.

The same model, other filers

Each one is built from that company's own annual filing and graded the same way.

AAPL · three-statement linkage NVDA · three-statement linkage

Other models on MSFT

MSFT · accretion / dilution MSFT · comps (fundamentals)MSFT · dcf sensitivity grid MSFT · single-stage dcf MSFT · ebitda bridge MSFT · basic lbo MSFT · wacc build-up

Terms this model is built from

Balance-sheet identity

Educational use only — not investment advice. Figures come from public SEC filings; Echelon teaches you to analyze data, it never recommends buying or selling any security.

“How do the three statements link together?”

The 30-second answer

Why it works

The statements are three views of one set of transactions. The income statement measures performance over a period, the balance sheet is a snapshot at its end, and the cash flow statement reconciles how cash moved between two snapshots.

The common trap

Treating gross profit or operating income as filed facts to copy rather than lines to derive, and missing that equity is the residual: assets minus liabilities, not a separate input.

The full mechanics · 4 steps

01Gross profit = revenue − cost of revenue.
02Operating income = gross profit − operating expenses.
03Total equity = total assets − total liabilities.
04Net income links the income statement to cash flow and retained earnings.

Comes up inIB first-round technicalsCorporate finance interviewModeling test

How this is graded

Signed out, nothing is recorded: work it as many times as you like. Signed in, each graded attempt is saved to your account so your dashboard can track it.