What is Financial Modelling?
Financial modelling is the process of building a financial model – a complex spreadsheet that has a financial aspect.
Generally, a financial model will consist of inputs, assumptions about how the inputs affect outputs (i.e. formulas and calculations), and outputs or reports.
What do you Model?
Common subjects of a financial model include:
- an entire company;
- an individual business unit; or
- 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 e.g. when someone buys or sells a business.
Forecasting performance under a variety of scenarios e.g. business planning, project
economics, business cases, financial product calculators, etc.
Analysing sensitivities and risks e.g. what happens to profit if sales go up/down by 10%, what
are the risks in this project, etc.
Managing e.g. operations budget for next year, analysis of sales or costs, process monitoring.
Reporting e.g. management reports, key performance indicators (KPI’s), dashboards and
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 either Microsoft Excel, a tool most commonly used for financial modelling, or Invest for Excel which is Europe’s leading financial modeling software.