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Financial Modeling Definition

Definition of Financial Modeling

Financial modeling is the process of building a projection of a company’s operating and financial performance into the future in the form of a ‘model’ using Excel. The model can then be used for budgeting, planning, operations, valuation, capital raising, mergers and acquisitions, and almost any other corporate activity. The models are built by financial analysts and require a strong understanding of accounting, finance, Excel, strategy, and logic.

 

Financial Modeling Definition

Additional Questions and Answers

CFI is the official global provider of financial modeling and valuation analyst FMVA Designation. CFI’s mission is to help anyone become a world-class financial analyst and has a wide range of resources to help you along the way.

In order to become a great financial analyst, below are some additional questions and answers for you to explore further:

  • What is are the types of financial models?
  • What is sensitivity analysis?
  • What is bookkeeping?
  • What are the most common valuation methods?

Example Excel Model

Below is a screenshot from one of CFI’s online analyst training and certification courses, offered 100% online.

To learn How to Build an Excel Model step-by-step, click on the image below.

financial modeling questions and answers

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