What is Financial Modeling?
Financial modeling is the process of creating a summary of a company's expenses and earnings in the form of a spreadsheet that can be used to calculate the impact of a future event or decision.
This is a mathematical model designed to represent a simplified version of the performance of a financial asset or portfolio of a business, project, or any other investment.
In corporate finance and the accounting profession, financial modeling typically entails financial statement forecasting; usually the preparation of detailed company-specific models used for decision-making purposes and financial analysis.
A financial model has many uses for company executives. Financial analysts most often use it to analyze and anticipate how a company's stock performance might be affected by future events or executive decisions.
Applications of Financial Modeling:
Applications to financial modeling include the below
- Business valuation, especially discounted cash flow, but including other valuation approaches
- Scenario planning and management decision making ("what is"; "what if"; "what has to be done")
- Capital budgeting, including cost of capital (i.e. WACC) calculations
- Financial statement analysis / ratio analysis (including of operating- and finance leases, and R&D)
- Project finance modeling
- Cash flow forecasting and ALM-related
- Credit decisioning: Credit analysis and Consumer credit risk; impairment- and provision-modeling
- Working capital- and treasury management
- Management accounting: Activity-based costing, Profitability analysis, Cost analysis
What is Financial / Business Valuation?
A business valuation is a general process of determining the economic value of a whole business or company unit. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings. Owners will often turn to professional business evaluators for an objective estimate of the value of the business.
The topic of business valuation is frequently discussed in corporate finance. Business valuation is typically conducted when a company is looking to sell all or a portion of its operations or looking to merge with or acquire another company. The valuation of a business is the process of determining the current worth of a business, using objective measures, and evaluating all aspects of the business.
A business valuation might include an analysis of the company's management, its capital structure, its future earnings prospects or the market value of its assets. The tools used for valuation can vary among evaluators, businesses, and industries. Common approaches to business valuation include a review of financial statements, discounting cash flow models and similar company comparisons.
Valuation is also important for tax reporting. Some tax-related events such as sale, purchase or gifting of shares of a company will be taxed depending on valuation.
Skills covered in this course
- Budgeting & Forecasting
- Presentation & Visuals
- Financial Modeling
The course offered is valid for lifetime and provides complete flexibility for the learner to carry out the course on a self learning mode. However the average time taken for people to complete the course is a period of 6 months.
This course is provided by Corporate Finance Institute, Canada and is recognized internationally across organizations and provides the required skills and knowledge for application in the field of corporate financial modeling and valuation.
All our students will be able to get this course at a fees of USD 250/- for enrolment of the course click our course details mentioned on the side panel to register immediately.