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.
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:
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