In the world of finance there are countless tools and resources to manage the day-to-day operations of companies and one of them is the financial model , a formula used to capture the financial reality of a company. Do you want to know in more detail what it consists of and the types that are most used in the sector?
Finance began to be defined as a science around the 1950s, more than 70 years of history, theory and practice, which have given rise to such important formulations as the financial model, a tool on which we focus in this article. What exactly is a financial model ? What are they used for? What types of financial models are used in the economics sector and in the management and administration of companies and organizations?
What is a financial model?
The first question is obvious: what do we mean when we refer to a financial model ? What is it ? It is a resource used in the world of economics and finance that encompasses a set of mathematical operations and equations, statistics and data that are taken to make predictions about the financial behavior of a business, possible investments or other types of economic operations.
Several key aspects to better specify what a financial model is :
Tool used in the world of economics and the jamaica whatsapp data administration of companies and organizations.
It brings together various financial variables, data, operations and other mathematical resources for further analysis.
It allows professionals to make future predictions of a company's economic performance.
What is a financial model for?
And what kind of evaluations could be carried out using this resource? What is the purpose of a financial model?
It allows to generate a global vision of the financial status of a company.
Different variables are analyzed that can be put into perspective with data from the past and what is expected in the future, in relation to assets, liabilities, billing, liquidity, investments, etc.
It facilitates decision-making. Through a thorough analysis of aspects such as those mentioned above and others, certain strategies are planned and certain actions are implemented.
The financial models used are resources for all types of companies, including SMEs , medium-sized and large firms. They must be executed by professionals who are properly trained in the economic field, and these and other key topics are covered at EAE Barcelona in specific and comprehensive training courses such as the Master in Finance and the Master in Financial Management .
How to make a financial model?
In both training programs, students will learn in depth key aspects such as how a financial model is carried out . Several key aspects define the process:
There are specific programs for making financial models in economics.
The fundamental tool is the spreadsheet, to collect the flow of expenses and income, investments, profit and loss account forecasts, among other data.
It includes both present and past information, a historical record that compiles the economic data that could define the future of the company in order to have graphs and visual information that facilitate the communication of results.
Numerous inputs and outputs are collected in order to then draw up a map of the financial health of the company on which the financial model in question is carried out .
This resource is used in the finance and economic administration departments of all types of businesses and companies. It is especially important to note that it facilitates decision-making and the implementation of corporate strategies. It is often the basis for actions that require good financial health as well as for recalculating business plans in cases of economic crisis in a corporation.