Financial modeling is a crucial skill in finance and banking. It can seem complex at first, and may take years for analysts and associates to fully master, but the practice helps make financial decision-making easier.
In this comprehensive guide, we’ll walk through the different aspects of modeling from best practices to avoiding pitfalls.
What is Financial Modeling?
Financial modeling refers to the process of creating a forecast, or a model, of a financial situation. The goal is to simulate different futures based on past results and upcoming goals. The model forecasts how changes in one variable can potentially affect other parts of the business.