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Financial Modeling Plug

What is a Financial Modeling Plug?

A financial modeling plug is when there is a formula that automatically makes the balance sheet balance. It is usually set to be the cash balance or the short-term debt balance and is calculated as the difference between all other assets and liabilities on the balance sheet, excluding this one item. It is highly recommended not to use a plug when building financial models as it will cover up the fact that the model may contain errors in it.

 

Financial Modeling Plug

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.

Analyst Certification Program