Different Types Of Financial Models in Financial Modelling

Financial models are used to evaluate a company’s past  performance, to mark a company with respect to its peers/ competitors or to estimate how the company is going to perform in future. In finance parlance, these are known as Credit Analysis, Ratio Analysis, Equity Research, and Investment Banking etc. In this article, I have
covered the major types of financial modelling.
Three Statement Model:

Three basic statements to understand a company’s financial performance are

    Income Statement
    Balance Sheet
    Cash flow statement.

Given an audited financial statement, we need to prepare a financial model by linking all these three statements. Different companies have different styles and approaches to represent their cost-revenue and balance sheet items. While developing this kind of models we need to appropriately classify them under different sections to normalize the company’s brassiness to inflate or deflate revenue, profit, cash flow etc.