What Is Financial Modeling
What Is Financial Modeling
What Is Financial Modeling
How does a retail organization decide when, where and how big a store to open?
How does an entrepreneur decide whether his idea makes sense or how does a
venture capitalist decide if he should fund that idea? How does an investment
banker decide how much money will a company be able raise and at what cost or
how does he help his client arrive at a valuation for a merger and acquisition
transaction.
Overview
Financial Modeling is a core skill that is almost mandatory for anyone who wants to
build a career in finance. It is also important for anyone who wants to start his or her
own business and even useful for sales/marketing professionals as it comes in handy
in bidding for projects, determining payback/utility of campaigns etc.
Applications
Financial Models can vary in from, type and complexity based on the purpose for
which they are built. It can be a one sheet model for a quick analysis or it can be a
multi-sheet, multi workbook model with several cross links for a company or an
industry. Some of the common applications of financial modeling are:
Discounted Cash Flow (DCF) analysis is one of the most common methods of
valuation. DCF analysis gives the result of a company’s current value, known as “net
present value,” by forecasting its future free cash flows. It functions on the principle
that the value of a business is the sum of its projected future free cash flows,
discounted at a suitable rate.
M&A model
Skills
Prerequisites
Financial Statements; Financial Management and Ratio Analysis; Valuation Methods
Excel, Written Communication, Analytical Ability
Core Skills
Financial Statement Analysis, Building financial statements in Excel, Building
Financial models
Related Skills / Knowledge
Understanding of Financial markets like market structure, mutual funds, debt
markets, credit appraisal and ratings etc.
To acquire Financial Modeling skills : CLICK HERE
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