In this video, I want to show you how to build the income statement for this company year by year starting with the revenues. I will be showing you the formulas in a lot of detail because this kind of practical application or this practical view of how to do valuation is really important if you want to then go out into the real world and apply these concepts to either firms you're evaluating or another professional contexts. So for now we have a blank income statements, and I realized that the case gave you the income statement for 2018. I want to show you where those numbers come from. Let's start with 2018 revenues. So those 2018 revenues are given by, and I always start with this equal sign that activates the Excel spreadsheets. Feel free to follow along pause the video as needed as you construct your own model and in order to see where each number comes from. As I said, we activate the cell by clicking the equal sign. It also works if you use the plus sign as fairly equivalent. I'm going to do equal sign, and then, I want to turn back to our assumptions worksheets. This is something that I strongly recommend in terms of good practices of how to build an Excel model for evaluation. Keep your assumptions in one sheet then have your pro forma income statement and other auxiliary calculations in another sheet, and then the free cash flow evaluation in a third worksheet. You can have much more complicated models where you might also want to have balance sheets and cash flow statements. We're going to keep this one simple and have our income statement, some auxiliary calculations in this worksheet, and then all of the free cash flow evaluation in the third worksheet. So as I was saying, the revenues are given by what? Let's turn back to the assumptions worksheets. We have the number over here of $100,000 per store, that's how much I obtained from each store in each year. I'm going to use this trick in Excel of fixing those 100,000, because I want to use this number for many of the years. So whenever I'm talking about revenues, I want the formulas to point to the $100,000 cell, and that is this assumptions B5 cell. So you want to make sure that you fix that cell. On a Windows computer, you can do that with the shortcut F4. You can also type in the dollar signs around B and five and that would also work. What is revenue then? It is this $100,000 per store times the existing stores in each year. There's an important distinction here between the existing stores and the total stores. Notice that the case says, existing stores produce revenue. We will assume that we are building out these new storage during the year. So they are not producing revenue. They will only start producing revenue once they are complete. So the revenue in each year will be given by $100,000, the cell assumptions B5, times the number of existing stores, that will be assumptions B16. Notice also that I did not fix the B16 cell. Why not? Well, because, these 20 stores are only true in 2018, that number is going to increase. By 2019, I want to use cells C16. In 2020, I want to use the cell D16, and so on until 2023, when I want to use cell G16. So I don't want to fix the 20 because this is going to change in each year that I project out. Here it is. Our revenues in 2018 are two million dollars. Again, how is that obtained? That is obtained by multiplying assumptions B5 times assumptions B16. Notice that because I fixed that B5 cell, I can now drag this number to the right, and this will give me the correct revenues in each year. Let's look at 2023. What would I want to have there? I still want that assumptions B5 cell because that's our $100,000, but I want to have that multiplied by assumptions G16, which is the number of existing stores in 2023. Each of these you can verify is doing exactly what you would want. It is pointing to the same B5 cell and then to the correct number of existing stores.