# What is Corkscrew Calculation?

## What is Corkscrew Calculation?

Corkscrew calculations are an essential component of detailed and informative financial models. The calculations ensure the consistency and integrity of a model. In addition, they provide the reader of the model with a simple approach to absorbing the included information.

## Components of Corkscrew Calculation

Every corkscrew calculation consists of the following four components:

### 1. Initial balance

The beginning balance of the current period is always the same as the ending balance of the previous period.

### 2. Up flow

A flow that increases the initial balance. For example, in the PP&E calculation, capital expenditures (CapEx) are upward moves because they are added to the opening PP&E balance.

### 3. Downflow

A flow that lowers the initial balance. For example, depreciation in the PP&E calculation is a downward flow because it is deducted from the initial PP&E balance.

### 4. Ending Balance

The ending balance is calculated using the three previous components. All upward movements are added to the opening balance, while all downward movements are subtracted from the opening balance. Then the ending balance of the current period is updated and used as the opening balance for the next period.

Corkscrew calculations are an essential part of detailed and meaningful financial models. The calculations ensure the consistency and integrity of a model. In addition, they provide the reader of the model with an easy approach to assimilating the information contained.

In financial models, corkscrew accounts are mainly used in various supporting schedules such as the PP&E schedules, accounts payable schedules, and retained earnings.

## What is a corkscrew used for in a financial model?

The corkscrew is a standard modeling component that allows balances to be modeled consistently. It deals with the 4 components we’ve already seen and adds the ability to “inject” an initial balance into the corkscrew at a specific point in time, for example, a “last actuals” balance.

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## What is Corkscrew Calculation?

In financial modeling, the corkscrew calculation (also known as roll-forward calculation or corkscrew accounts) allows the consistent modeling of balances. Essentially, in a corkscrew calculation, the ending balance from the previous period is used as the beginning balance in the current period (in other words, the balance is rolled forward).