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What is Financial Modelling?
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A financial model is a complex spreadsheet
that has a financial aspect.
Normally, a financial model will consist
of inputs, assumptions about how the inputs affect outputs
(ie formulas & calculations), and outputs or reports.
What do you Model?
Common subjects of a financial model
include:
- An entire
company
- An individual business unit
- A project
What do you use a Financial Model for?
Financial models are used in business
to make decisions.
We've built financial models for clients
for a variety of purposes. Some look forward into the future while
others look backwards at what has already occurred:
- Valuing eg when someone
buys or sells a business
- Forecasting performance
under a variety of scenarios eg business planning, project
economics, business cases, financial product calculators
etc
- Analysing sensitivities
and risks eg what happens to profit if sales go up/down
by 10%, what are the risks in this project etc
- Managing eg operations budget
for next year, analysis of sales or costs, process monitoring
- Reporting eg management
reports, key performance indicators (KPI's), dashboards
& scorecards
Financial modelling requires a high
level of skill in finance, accounting, and spreadsheet
design best practices.
What Software do you use?
We build financial models for clients
using Microsoft Excel, the tool most commonly used
for financial modelling.
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