What is financial modelling?

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Financial modelling is a quantitative analysis which is used to decide or a forecast about
a project generally in asset pricing model or corporate finance. Different hypothetical
variables are used in a formula to ascertain what future holds for a particular industry or
for a particular project.

In simple terms financial modelling means forecasting
companies’ financial statements like Balance Sheet, Cash Flows, and Income Statement.
These forecasts are in turn used for company valuations and financial analysis.
Financial modelling is useful because it helps companies and individuals make better
decisions.

Financial modelling is not confined to only company’s financial affairs. It can be used in
any area of any department and even in individual cases.