> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/help/financial-outputs-and-valuation/cash-waterfall-overview.md).

# Cash Waterfall Overview

This article explains the **Cash Waterfall** in Model Reef.

You will learn:

* How the Cash Waterfall is structured.
* How it bridges P\&L performance and cash movements.
* How it is used for investor, board and lender communication.

The Cash Waterfall is often the most useful single view for investors.

***

## 1. Purpose of the Cash Waterfall

The Cash Waterfall is designed to:

* Show how operating performance (Revenue, COGS, Opex, Staff) flows through to cash.
* Make working capital movements visible via a clear bridge.
* Highlight the impact of capex, debt and equity flows on cash.
* Provide a clean path from EBITDA to free cashflow to equity.

It combines elements of the P\&L and Cashflow Statement into a single structured view.

***

## 2. Structure of the Cash Waterfall

A typical waterfall in Model Reef contains the following sequential lines:

{% stepper %}
{% step %}

### Revenue

Top-line inflow reflecting sales.
{% endstep %}

{% step %}

### COGS

Cost of goods sold, deducted from Revenue.
{% endstep %}

{% step %}

### Opex

Operating expenses (excluding staff if shown separately).
{% endstep %}

{% step %}

### Staff costs

Payroll and related staff expenses.
{% endstep %}

{% step %}

### EBITDA

Earnings before interest, taxes, depreciation and amortization — mirrors the P\&L.
{% endstep %}

{% step %}

### Tax paid

Cash taxes paid, adjusting EBITDA for actual tax outflows.
{% endstep %}

{% step %}

### Change in net working capital

Movement in receivables, payables, inventory — captures timing effects.
{% endstep %}

{% step %}

### FCFF type operating cashflow line

Operating cashflow after tax and working capital adjustments (free cashflow to the firm style).
{% endstep %}

{% step %}

### Capex

Capital expenditures (investing cash outflows).
{% endstep %}

{% step %}

### Interest paid

Cash interest payments on debt.
{% endstep %}

{% step %}

### Debt drawdowns and repayments

Financing cashflows reflecting new borrowings and repayments.
{% endstep %}

{% step %}

### Equity injections

New equity invested into the business.
{% endstep %}

{% step %}

### Dividends

Cash distributed to equity holders.
{% endstep %}

{% step %}

### Net cash movement

Net change in cash for the period, reconciling inflows and outflows.
{% endstep %}

{% step %}

### Closing cash

Ending cash balance that matches the Balance Sheet.
{% endstep %}
{% endstepper %}

Exact line labels may vary slightly depending on configuration, but the logic is consistent.

***

## 3. Relationship to P\&L and Cashflow Statement

The Cash Waterfall:

* Uses P\&L values down to EBITDA.
* Uses cash based values for tax, working capital, capex, interest, debt and equity movements.
* Reconciles both accrual and cash perspectives in one place.

It does not replace the Cashflow Statement but provides a more investor friendly view of the same underlying information.

***

## 4. Using the waterfall in scenarios and reporting

You can:

* Compare waterfalls across scenarios.
* Use waterfalls at different levels of the branch structure.
* Include waterfalls in dashboards and board or investor packs.
* Export waterfalls as images or PDFs for presentations.

Because the waterfall is generated from the same engine as the P\&L and cashflows, it stays accurate even as assumptions evolve.

***

## Related articles

* [Weekly Cash Flow for Hospitality](/use-cases/hospitality-restaurants-cafes-bars/weekly-cash-flow-for-hospitality.md)
* [Build a Sensitivity Analysis Pack](/how-tos/scenarios-and-planning/build-a-sensitivity-analysis-pack.md)
* [Fixing Merged Cells](/help/importing-and-data-inputs/fixing-merged-cells.md)
* [Editing Driver Time Series](/syntax/drivers-syntax/editing-driver-time-series.md)