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What is Financial Modeling?

Financial Modeling is a tool that gives the financial representation of any company. It is an approach through which you can estimate the financial performance of a business or a project by considering all the pertinent factors, risk assumptions and growth and then analysing their impact on the said business or project. In simple words, financial modeling helps the company view their current income, project the future expenses and thereby help the business make a sound financial decision based on the projections.

Interpreting Financial Modeling

Financial modeling is the numbered representation of the business's past, present and future operations. It is one of the core elements that help the business take significant business decisions. With the help of financial modeling functions, businesses can also ascertain the risk they might have to bear if they implement certain decisions. The various financial models have supported online internet businesses to a larger extent by enabling them to make quick decisions with confidence.

Who Needs Financial Modeling

Financial Modeling is widely used by sectors like

  • Mutual Funds
  • Equity Research
  • Investment Banks
  • Financial KPOs
  • Credit Rating Agencies
  • Project Finance companies

These sectors use financial modeling functions extensively because it

  • Helps in creating financial forecasts
  • Is used for Budgeting
  • Used for Evaluating capital, equity and debt
  • Helps raise capital
  • Is Used to Allocate Capital Assets
  • Understands the organic growth and development of the business
  • Is used for mergers and acquisitions
  • Aids in the valuation of the assets to be sold off
  • determines the value of the business

Benefits of Learning Financial Modeling

Deep Insights into Business Operations

With the help of financial modeling, the business will get deep insights into its operations. This helps them predict the internal and external economic environment changes and take preventive steps that might affect the business operations.

Helps with the Competition

Through the financial modeling functions, you can stay ahead of the competition by conducting various financial modeling functions. With the help of the competitor analysis, businesses can get all the detailed and relevant information about the sector. Thereby financial modeling enables the business to make informed business decisions with the help of the output they give.

Promising Careers

Financial modeling has opened up one lucrative career opportunity for job seekers. It is extensively used in equity research, commercial banking, investment banking, and real estate, among the various industries. Therefore, if you are interested in data analysis and are curious about creating different financial models, it is a promising career option.

Helps in the Growth of the Business

With the help of financial modeling, you can grow your business considerably as it helps them recognise the areas of improvement and investment that offer the business with growth opportunities and profits.

Learning financial modeling will enable you to use the data to get valuable insights that will help you make optimal business decisions and transform the business for the better. Skillfin Learning is one of the best financial modeling online learning platforms that will help all aspiring analysts learn from the best in the business.



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