In these modern times, there are a lot of tools that a business typically makes use of on a regular basis, but among all of them, one that is crucial to determining its success is financial modelling. As an aspiring financial analyst, it is crucial for you to know the true potential of financial modelling and why it is so important. Thus, in this article, we will explain to you the meaning of financial modelling as well as outline the concepts that encompass a financial modelling course. Let’s get started.
What is A Financial Model?
In the simplest of terms, a financial model can be described as being a tool that is primarily built on Excel and used by companies to predict its future cash flow as well as potential income sources. The most common use of this tool is to predict the future of the company’s financials and how it can prepare itself for future challenges as well as opportunities.
In order to build a financial model or forecast, a number of factors need to be taken into account. This includes the history of the company’s performance and its assumptions for the future of its business among many others. Along with this, an income statement, cash flow statement and balance sheet need to be drafted which make up for the key fundamentals in developing a financial model.
A financial model can be used by a business for several applications including the creation of predictions for mergers and acquisitions, leveraged buyouts as well as discounted cash flow statements.
Uses Of A Financial Model
Now that you know about the basic concept of a financial model, let us quickly understand the main uses of a financial model in a business environment.
1. Raise Capital: One of the most common uses of a financial model is to raise capital from investors as well as take working capital if necessary.
2. Acquisition: Second to raising capital, companies often make use of financial models to acquire new markets, skills as well as shares.
3. Forecasting and Budgeting: Last but not the least, a well defined financial model helps companies forecast the way for the future, as well as decide on the budget for various of its activities.
What is a Financial Modelling Course?
Now that you are aware of what a financial model is, along with its main uses, let us take a look at the various components a financial modelling course encompasses.
1. Educate you on the basics of financial modelling and the skills you need to acquire in order to successfully create a financial model.
2. Analyse real-life case studies of companies that actively make use of financial models and how it has helped them grow.
3. Various skills in software that are used to create financial models, including Excel among others.
4. Educate you on the various types of financial models that can be created, those that are being actively used by businesses and their most common applications.
One of the most important pointers you need to take note of as a future financial analyst is the fact that in order to create sustainable models that provide solutions, one aspect that trumps others is regular practice and implementation.
Job Roles And Career Opportunities
Last but not the least, it is important for you to know the main job roles or designations that are responsible for creating financial models. This includes but is not limited to:
1. Investment Bankers
2. Financial Analysts
4. Corporate Executives
Financial modelling as a skill is becoming more and more important to acquire on a regular basis and thus in order to better equip yourself for the future, it is necessary that you undertake a financial modelling course today.
Finance is gaining immense importance in recent times. Various tools have now come into the market that Finance professionals in their job can use. If you check out the financial analytics course syllabus, you will realize that some tools are essential for financial analysis. There are several online finance courses that you can take up to understand the application of financial modelling and its techniques.
Courses on Financial Modelling
There are specialized courses for financial analysts that offer an in-depth understanding of financial decision-making elements. You can pick an excellent financial analyst course from the online finance courses that are available out there. People who want to make a career in investment banking also opt-in for a chartered financial analyst course to understand the subject's intricacies and make a successful career.
The online finance courses on Financial modeling teach you the basics of finance and the various tools and techniques involved in financial modelling.
The financial analytics course syllabus also includes the application of Excel in managing and working with finance. There are several courses for financial analysts online. You can pick one based on the requirement and the level of expertise needed.
Use of Financial modeling
Financial modeling is used for efficient decision-making and to analyze the company's economic performance. A financial analyst course will discuss various models and methodologies required to conduct an economic analysis of companies. Some uses of these models are:
- Raising capital for the company
- Acquiring or merging with new or existing companies
- Asset management
- Growth of business
- Decisions on divesting or selling the existing assets and purchase of new assets
- Financial forecasting
- Allocation of Capital
- Valuation of Businesses and their verticals
- Analysis of financial statements and key financial ratios
- Management accounting
A chartered financial analyst course will also give you similar insights, but the level of learning would be a notch higher. The chartered financial analyst course syllabus is more comprehensive compared to the financial analytics course syllabus. Therefore, you can pick one depending on the job you want to pursue.
Financial modeling has a lot of applications. The financial analytics course syllabus covers all the significant financial modelling aspects that will prepare you for the job market. There are several industries where you can look for an appropriate job. Some of these popular industries or sectors are:
- Public Accounting
You can get into several domains in a company after doing a course on financial modelling. Some of these popular domains or job functions are:
- Equity Research
- Sales and Trading
- Investment Banking
- Commercial Banking
- Due Diligence
- Transaction advisory
- Investor Relations
- Corporate Development
- Portfolio management
- Private Equity
A financial modelling course will help you in building various financial models that any company can use. These courses will lay down a solid foundation for your career in finance. You can also come up with a go-to model using the learnings of the financial modelling course.