Financial Modeling Terms

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Financial Modeling Terms & Definitions

The most common financial modeling terms and definitions are (1) Hardcodes – manually entered numbers, (2) Assumptions – independent variables in a model, (3) Three-Statement Model – a fully linked income statement, balance sheet, and cash flow statement, (4) CapEx – capital expenditures, (5) WACC – weighted average cost of capital, (6) DCF – discounted cash flow analysis, (7) Sensitivity Analysis – measuring changes in dependent variables based on changing assumptions, (8) LBO – a leveraged buyout using as much debt as possible, (9) Cash Sweep – when all excess cash is automatically swept towards some other use, (10) IRR – the internal rate of return from all cash flows of an investment.

Additional Questions and Answers

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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 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

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