Trace the recommendation back through the evidence chain
A trustworthy project shows where every number comes from. Let's trace the final recommendation back through the evidence chain.
Evidence Chain Walkthrough
What is the final recommendation?
The company should pursue the expansion because projected returns exceed the cost of capital.
Source: Dashboard sheet - Executive Summary section
What financial evidence supports this?
Projected ROI of 18%, payback in 2.3 years, and positive NPV based on 10% discount rate.
Source: Income Statement projections + Assumptions sheet
What are the three-statement links?
Revenue growth drives assets (Balance Sheet) → Cash flow improves (Cash Flow Statement)
Source: All three statements are linked via formulas
What could make this recommendation weak?
Key assumptions: 15% revenue growth, 8% cost inflation. If these vary, the conclusion may change.
Source: Assumptions sheet - sensitivity table
The three statements must connect logically:
Net Income →
Retained Earnings
Reconciliation
- Net Income from Income Statement → Retained Earnings on Balance Sheet
- Balance Sheet changes → Cash Flow Statement operating activities
- All three must be internally consistent
If you see any of these signs, the project lacks credibility:
- Recommendation has no numbers attached
- Cannot trace a number back to its source
- Balance sheet does not balance (A ≠ L + E)
- Cash flow does not reconcile to balance sheet changes
- No risk or limitation mentioned
- Dashboard is empty or has static screenshots
- Assumptions are not documented
In your shared workbook, locate the executive summary and trace one recommendation back to its sources:
- What is the recommendation? (Dashboard)
- What numbers support it? (Income Statement, Balance Sheet)
- What assumptions make it true? (Assumptions sheet)
- What could go wrong? (Risk/limitation statement)