FAQs on Financial Modeling

Financial modeling is a niche field which involves the building up of financial models from scratch or maintaining an existing financial model. 

Have you ever wondered what financial modeling is all about? Financial modeling is the process by which a company creates a financial representation of all or some aspects of the company. The financial model is then characterized by recommendations and calculations, based on the extracted information. The model may also provide summaries of particular events for the end user and even provide direction for future business actions.

Here are some frequently answered questions on financial modeling:

1. What is a financial model?

A financial model is anything that can be used to forecast, calculate or estimate financial numbers. These mathematical models include variables which are linked together. The Discounted Cash Flow (DCF) model and Value-at-Risk (VAR) models are some of the most complex financial models that are used for risk management.

2. Who uses financial models?

Your business firm can use a financial model to analyze your company or project your company’s financial performance. Real estate companies, oil and gas industries, banks, financial institutions, government organizations and non-profit organizations all require financial models to help them project their finance in the right manner. So whether you are an individual, a business owner or an entrepreneur, you can benefit from financial modeling. Continue reading