Here is a list of the most important financial modeling steps: (1) enter 3-5 years of historical financial information into Excel, (2) calculate the historical ratios, trends, and analysis for the company, (3) make assumptions about how the business will perform in the future, (4) forecast the income statement, balance sheet, and cash flow statement, (5) calculate free cash flow to the firm, (6) perform discounted cash flow (DCF) analysis to value the company, (7) conduct sensitivity and scenario analysis, (8) perform error checking and stress-test the model, (9) create charts, graphs and tables, and (10) present the results of your analysis and recommendations.
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