Financial modelling is used to create strategies & business models around which the business could revolve. They are used for the evaluation of the performance of any particular firm/company. A lot of processes are performed under Financial modelling like budget analysis, resource allocation, cost analysis, etc. It helps in fruitfully utilising any company’s resources. Financial modelling is also used for comparative analysis of any firm’s performance to its competitors. A financial modeller has certain skills that are used for creating business strategies & for predicting the trends. Read on to know more about a successful financial modeller.
Skills Required to Become an Expert in Financial Modelling
- A good financial modeller can read and analyse financial statements. To build a successful financial model, you will have to be familiar with accounting terminologies like accruals, amortization, revenue recognition, etc.
- Besides being able to read financial statements, a financial modeller should be able to link various types of account statements which are the income statement, balance statement, and cash flow statement.
- A good financial modeller has good forecasting skills. Forecasting through data analysis helps in determining the future course of a firm/company & also helps in predicting the upcoming trends. It helps in adapting to changes in the market quickly.
- To become an expert in financial modelling, you need to have good problem-solving skills. One should be able to simplify complex problems and find solutions to them. Financial statements can get very complex, giving attention to minute details is a must for a financial modeller.
- Good designing skills are required to build a successful financial model. You need to make the flow charts, tables in such a wat that it could be understood by other employees too. Applications that are used for creating financial models should be known to a financial modeller.
- A good financial modeller has good presentation and communication skills so that he/she can easily convey business strategies to his/her team.
- A good financial modeller is familiar with the different types of financial models and when to use them. Different types of financial models are Three Statement Model, Discounted Cash Flow Model, Merger Model, Consolidation Model, and many more.
- A financial modeller is aware of the taxation processes. He/she is also good at risk identification & management.
Education Required to be an Expert in Financial Modelling
If you have done a degree in MBA and have a bachelor’s degree in accounting, it is perfect for you to enter in the financial modelling field. There are also certain certification courses available on the internet. One should also try to practice to build various financial models with real data set, this will help you in understanding the real-life problems faced while creating financial models. One can also opt for a financial modelling course from any trusted source.
A lot depends on individual performance to be a successful financial modeller. The new-age technologies like big data, artificial intelligence, etc. are also being used in Financial modelling. A good financial modeller is familiar with the latest technologies and uses them to create automation in building financial models. Data analysis is also being used by financial modellers nowadays to analyse big chunks of data & extract meaningful information that can be further used for business forecasting.
A financial modeller is very important to any firm as he/she helps in shaping their business and realising potential opportunities at the right time. It is good to study the fundamentals of Financial modelling to be able to build a financial model. This was all about how one can become an expert in Financial modelling.