Innumerable inquisitive search regarding the definition of “financial modeling,” its significance to the finance sector, and the reasons behind the obsession with mastering it among students and professionals, is the purpose to bring forth this article. So let’s start with the fundamental explanation:
Financial modeling refers to the method by which a corporation puts up a financial picture of some, or even all parts of the company or the offered securities. Calculations are typically performed as part of the financial model, and suggestions are then made based on the results. Along with offering guidance on potential options or actions, the model may also detail specific events for the end user.
Financial Modeling Definition
Financial modeling is a technique employed by the companies for performing financial analysis, in order to forecast company’s income statement, balance sheet, cash flow statement, and other non-financial metrics over the next five to ten years. It entails creating intricate, company-specific Excel models that are later used for financial analysis and decision-making.
Financial modeling is mostly related with projection of cash flow in investment banking, corporate finance, and the accounting sector. The method of financial modeling is chosen based on the needs and specifications.
The Principal Uses of Financial modeling
Financial modeling is set up to serve multiple purposes. It is used to analyze finances, make decisions, and comprehend the performance and position of the company’s finances.
The following situations illustrate the usage of financial models.
Estimating future financial performance, often known as budgeting and financial planning.
Comparing the company’s performance to its targets and objectives.
Appraisal of the company.
Assessing how well the business is performing in comparison to its peers and industry rivals.
Examining the ratios and financial statements.
Management accounting and Manangement Information System preparation.
Calculating the new projects’ profitability ratios.
Resource distribution within the company.
Decision-making and long term planning.
Planning investments and allocating capital.
Business and asset sales, and mergers & acquisitions.
Reviewing the capital structure’s (debt/equity) composition
Pre-Requisites of Financial Modeling
Who can learn and perform financial modeling? Anyone, with the desire to learn or know:
Complex financial terms,
Common business practices,
Finance and accounting fundamentals (e.g. fundamental, valuation concepts, etc.), and
Possess self-confidence.
Now that we are aware of who can enrol to financial modeling course. Let’s know the available best financial modeling courses
Institutes offering Financial Modeling Courses
1. IIM Skills
IIM Skills is a reputable institution with a goal to offer high-quality education at a reasonable cost through live online learning programmes. In order to help students, entrepreneurs, studying or working professionals to larn and Up skill significantly in a few months, IIM skills offer one of the best Financial Modeling Course with excellent features and comprehensive curriculum.
Course Outline
This course contains six modules with detailed study and experiential learning in Basic & Advanced Excel – Intro to MS Excel, Macros, keyboard shortcuts, excel functions, creating different types of charts & graphs, dynamic dashboards, advanced excel, advanced functions,etc.
Key Accounting concepts , double entry book keeping, business entity concepts, Understanding financial statements their concepts & features, interlinkages & relationship among 3 financial statements, preparation of financial statements, understanding & reading annual report, MD& A, etc.
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Analysis of Ratio/KPI, preparation of financial summary, benchmarking company’s performance, Financial modeling fundamentals, different types of models- LBO, M&A, Private equirt return, 13 week cash flow models, business valuation, DCF valuation, concept of different risks, NAV approach for valuation, presentation of valuation output, preparation of valuation report, concept of pre-money & post money, and much more.
Features
Ranked #1 by top education blogs like Career360, CourseReport, AdvisorUncle & CourseDekho
Teaching Faculties with more than 12 years of experience in the relative field
Learning resource, industry specific & well researched available through LMS
Lifetime accessibility to the LMS
100% Practical Learning includes 100+ Hrs Practical assignments, Live Projects & case Studies
Two Months Internship Guaranteed with associated firms
100% Job Assistance
Preparation for Interview
MSME Govt. of India recognized IIM skills Master certification
24/7 Online support
FREE DEMO Live session before enrolment to course , on registration
Backup classes o the missed session
Job Referrals
Preparation of Resume & Post Training enhancement
Duration: 3 Months
Don’t loose your heart if you don’t know anything about financial modeling. This means you should enrol to the IIM Skills comprehensive Financial modeling Course that is ideal for motivating you to learn , revise and use your financial modeling abilities to their fullest potential.
Other related course by IIM skills with such unmatched feature in the finance sector is Business Accounting & Taxation Course
2. NSE Academy
NSE Academy wholly owned by NSE ,offers interactive courses on personal finance, and certification programmes. NSE offers certificate in equity valuation and financial modeling course
Course Outline
Understanding financial modeling and financial statements, creating a financial model, a simple case study involving the creation of a financial model, financial statement analysis, and methods of valuation are some of the subjects covered in this course on financial modeling.
Features
24-hour live interactive session
59 videos,
10+ hours of video content
30+ study material
Full length Test
10 Hrs Practical Internship available to participants at additional fees
3. The WallStreet School (TWSS)
The goal of the TWSS Financial Modeling course online is to prepare students for careers in the finance industry. It offers Instructor-led training by faculties with professional experience in the related industry.
Course Outline
It contains topics like Basic, Intermediate & Advanced Excel ,Powerpoint, Basic financial concepts, feasibility study & business modeling, comparative company & precedent transaction analysis, DCF valuation, Merger & LBO Models, Interview-Prep.
Features
Experienced Trainers with vast experience
Course Material Well Researched
Recognized Certification on successful completion.
120 hrs training course for 2.5 months
Now let us talk about careers in financial Modeling.
What Professions Employ Financial Modeling?
The following industries heavily rely on the financial models that are outlined here:
1. Use of Financial Modeling in Investment Banking
Investment Banking :Investment banking refers to certain business operations of a financial services firm or corporate division that involve advisory-based financial transactions on behalf of people, businesses, and governments.
Career as an Investment banker.
Investment Bankers help businesses execute transactions like mergers and acquisitions and raise financing (M&A).
2. Modeling Financial Data for Equity Research
Equity Research: In order to decide whether to buy or sell a company’s shares, equity research involves examining the company’s operations and surrounding environment. An acquirer might also use this information to decide how much to offer for a target company’s securities in a potential takeover deal.
Career as an Equity Researcher
The main responsibility of an equity research analyst is to present in-depth research reports on the stock market sector. Their in-depth market expertise aids investors in making important choices regarding the buying, selling, and ownership of a certain investment.
Equity researcher in the sell-side position at investment banks, making Buy, Sell, and Hold recommendations on publicly traded stocks .
3. Modeling Financial Data for Hedge Funds
Hedge Funds: Private investors form a limited partnership known as a “hedge fund” to manage their funds using a variety of tactics.
Career as Hedge Fund Managers
Hedge fund managers obtain funding from authorised and institutional investors and invest it in financial assets.
A wealthy investor with the means to diversify into a hedge fund may be drawn to it because of the manager’s reputation, the particular assets in which it is invested, or the innovative approach it uses.
4. Portfolio Management Services (PMS)
With the goal of providing higher risk-adjusted returns, PMS offers expert management of investments. With routine reviews and risk management, it also relieves clients of any monitoring headaches. For high net worth investors, it is therefore a perfect option for investment.
Career as a Portfolio Manager
A portfolio manager is a specialist tasked with selecting investments and carrying out investment tasks on behalf of invested people or institutions. Clients contribute funds to the Portfolio Management’s investment strategy in order to expand their investments in retirement, endowment, or educational funds.
5. Modeling Financial Data for Private Equity
Career in Private Equity Firms
Private equity firms raise funds from outside investors, utilise that money to buy, run, and enhance businesses, and then sell those businesses for a profit.
6. Modeling Financials in Venture Capital
Career as Venture Capitalist
Venture capital businesses raise capital that is invested in early-stage, high-growth enterprises with a view to exiting via acquisition or IPO.
7. Modeling Financial Data for Corporate Development
Career as Business Development Manager
Corporate Development focuses on partnerships, internal joint ventures (JV) negotiations, acquisitions, and divestitures.
Conclusion
Depending on the demands of the client and the company, financial modeling is applied for various purposes. It supports corporate decisions and aids in fulfilling obligations. It is employed in reporting, analysis, valuation, forecasting, and other processes. Before making any business decisions, it helps to gain a deeper understanding and analysing many scenarios and options. Hope this article serves the purpose intended to give insight what is financial modeling, its significance ,courses & career
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