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Financial Modeling Essentials

Financial modeling is a crucial tool for forecasting a company's economic performance by analyzing financial metrics and is primarily built in Microsoft Excel. It involves components like income statements, balance sheets, and cash flow statements, and is used for various purposes such as raising capital and business valuation. Mastery in financial modeling requires accounting knowledge and practical experience with real financials.

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Madhuri Dambal
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48 views13 pages

Financial Modeling Essentials

Financial modeling is a crucial tool for forecasting a company's economic performance by analyzing financial metrics and is primarily built in Microsoft Excel. It involves components like income statements, balance sheets, and cash flow statements, and is used for various purposes such as raising capital and business valuation. Mastery in financial modeling requires accounting knowledge and practical experience with real financials.

Uploaded by

Madhuri Dambal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Financial Modeling: Essential Skills,

Software, and Uses


• Presented by: [Your Name]
• Based on CFI insights by Jeff Schmidt
What is Financial Modeling?
• Financial modelling is forecasting a company’s or any project’s
economic performance by analysing financial metrics like
income and expenses, growth and risk factors. In the corporate
world, financial modelling is one of the most important tools
as the analysis can give a fair idea regarding the prospects of a
project or investment in the coming years. It will help
determine the return on investment and cash flows the project
will generate in the next 5-10 years.
• Combines historical and projected financial info
• • Used for business decision-making
• • Forecasts future performance
• • Typically built in Microsoft Excel
Components of a Financial Model
• Three-Statement Model:
• Income Statement
• Balance Sheet
• Cash Flow Statement
• Supporting schedules
• Advanced models:
• DCF, LBO, M&A, Sensitivity Analysis (a method
used to assess how changes in input variables
affect the output of a model or system)
Key Highlights
• • Combines accounting, finance, and metrics
• • Projects future results
• • Helps in valuation and decisions
• • Excel used for flexibility
Uses of Financial Models
• • Raising capital
• • Acquisitions/divestitures
• • Organic growth
• • Budgeting/forecasting
• • Capital allocation
• • Business valuation
• • Ratio analysis
• • Internal reporting
Why Excel for Financial Modeling?
• • Flexible and customizable
• • Universally accepted
• • Handles complex logic
• • Integrates with other tools
Who Builds Financial Models?
• • Investment Bankers
• • Equity Research Analysts
• • FP&A Professionals
• • Accountants (Valuation, Due Diligence)
• • Strategy & Business Development Teams
How to Learn Financial Modeling?
• • Practice using real financials
• • Compare with equity research reports
• • Take professional training (CFI, etc.)
Accounting Knowledge Required
• • Understand assets, liabilities, equity
• • Know revenue and expense flows
• • Learn financial statement links
• • Take accounting courses
Example – DCF in Excel
• • Use Perpetuity Growth Method
• • Forecast Free Cash Flows
• • Discount with WACC
• • Calculate intrinsic value
• [Insert DCF model screenshot]
Summary
• • Vital skill in finance
• • Supports critical decisions
• • Excel = most used tool
• • Accounting knowledge essential
• • Practice leads to mastery
Thank You!
• Questions?
• Explore more:
www.corporatefinanceinstitute.com
• Stay curious. Stay analytical.

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