Financial Modeling Process

What is the Financial Modeling Process?

Financial modeling is an iterative process and follows these standard steps: (1) enter three to five years of historical financial informationThree Financial StatementsThe three financial statements are the income statement, the balance sheet, and the statement of cash flows. These three core statements are intricately, (2) analyze the historical performance, (3) generate assumptions about future performance, (4) use the assumptions to forecast and link the income statementIncome Statement TemplateFree Income Statement template to download. Create your own statement of profit and loss with annual and monthly templates in the Excel file provided. The file includes revenue, cost of goods sold, gross profit, marketing, selling, G&A, salaries, wages, interest expense, depreciation, amortization, taxes, net income, balance sheet, and cash flow statement, (5) perform discounted cash flow analysis, (6) perform sensitivity analysis, and (7) audit and stress test the model.

Additional Questions and Answers

CFI is the official global provider of financial modeling and valuation analyst FMVA DesignationFinancial Modeling CertificationFinancial Modeling Certification - earn your certificate as a Financial Modeling and Valuation Analyst (FMVA)® for careers in investment banking, FP&A,. 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 answersKnowledgeCFI self-study guides are a great way to improve technical knowledge of finance, accounting, financial modeling, valuation, trading, economics, and more. for you to explore further:

What is are the types of financial models?Types of Financial ModelsThe most common types of financial models include: 3 statement model, DCF model, M&A model, LBO model, budget model. Discover the top 10 types
What is sensitivity analysis?What is Sensitivity Analysis?Sensitivity Analysis is a tool used in financial modeling to analyze how the different values for a set of independent variables affect a dependent variable
What is bookkeeping?AccountingOur Accounting guides and resources are self-study guides to learn accounting and finance at your own pace. Browse hundreds of guides and resources.
What are the most common valuation methods?Valuation MethodsWhen valuing a company as a going concern there are three main valuation methods used: DCF analysis, comparable companies, and precedent transactions. These methods of valuation are used in investment banking, equity research, private equity, corporate development, mergers & acquisitions, leveraged buyouts and finance

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