What is a Financial Modeling Plug?
A financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. 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 debtNet DebtNet debt = total debt - cash. Net debt is a financial liquidity metric that measures a company’s ability to pay all its debts if they were due today. Compares a company’s total debt with its liquid assets. balance and is calculated as the difference between all other assets and liabilities on the balance sheetBalance SheetThe balance sheet is one of the three fundamental financial statements. These statements are key to both financial modeling and accounting, 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.
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