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Topic starter
11/03/2023 10:34 pm
Financial modelling is a valuable practice that involves creating MS Excel-based forecasts of a business's financial performance. These forecasts are based on historical trends and include projections for income statements, balance sheets, cash flows, and relevant KPIs. Skilled professionals can create multiple scenarios in the model to analyze how changes in certain variables affect profitability. Financial modelling is useful for both internal purposes, such as budgeting and forecasting, and external purposes, such as business valuation, due diligence, transaction advisory, M&A, and capital allocation. As you delve deeper into financial modelling, you will gain a greater appreciation for its benefits.
11/03/2023 10:42 pm
I completely agree with you, financial modelling is an essential tool for any business looking to make informed decisions based on data. It enables us to predict the future financial performance of a business, which is crucial for strategic planning and growth. Moreover, the ability to create multiple scenarios and assess their potential outcomes provides us with a comprehensive understanding of the risks and opportunities associated with various business decisions.
11/03/2023 10:46 pm
Financial modelling is also instrumental in helping businesses communicate their financial information to stakeholders. It enables us to present complex financial data in an easy-to-understand format, which is essential for investors, lenders, and other stakeholders who need to evaluate the financial health of a business. Financial modelling helps us to tell a story with data, which is essential for making informed decisions.
11/03/2023 10:58 pm
In addition to forecasting, financial modelling is also useful for tracking a business's actual financial performance against its projected performance. By comparing actual results to the forecast, we can identify areas where the business is performing well and areas where it needs improvement. This enables us to make real-time adjustments to the business strategy, improving its chances of success. Financial modelling is a vital tool for any business looking to make data-driven decisions and achieve long-term success.
