What is Financial Modeling – Examples

by Jason Varner Financial Projections Template
Own a business? Interested in investing or looking for investors? Then you need a financial model. Financial modeling is the process of creating a framework or a model of a business’s financial situation. It usually comes in a form of a mathematical representation which shows the performance of all financing in a business, project, or any other investment. Business executives, entrepreneurs, venture capitalists, and other entities, greatly benefit from financial modeling, hence it became a great tool commonly used for those in need of help in financing.

There are many types of financial models which are commonly used nowadays. Listed below are financial modeling examples.

Basic Financial Models

Three Statement Model – most basic setup for financial modeling, consisting of the three statements such as the income statement, balance sheet, and cash flow.
Discounted Cash Flow (DCF) Model – most used valuation method, built on the 3-statement model to value a business’ future cash flow based on its Net Present Value (NPV)
Budget Model – either personal or business use, this is a popular model for creating a budget plan
Forecasting Model – best use in a financial plan, to do a forecast, projection, and analysis

Advanced Financial Models

Initial Public Offering (IPO) Model – commonly used by investment bankers and corporate development professionals to do a valuation of their business before going public
Merger Model (M&A) – usually used by advanced financial modelers to conduct a merger and acquisition
Leveraged Buyout (LBO) Model – another advanced financial model for creating a sound debt schedule 
Sum of the Parts Model – this kind of model is usually built by taking several DCF models and summing it up together
Consolidation Model – in this model, instead of just one business, there will be multiple business added into one single model
Option Pricing Model – there are actually two ways you can create with this kind of model, but basically, this is usually presented purely as mathematical and acts as a calculator rather than subjective

To learn more about financial modeling and acquire financial models that you can use as a template, you can check out eFinancialModels which offers a wide range of industry specific financial model templates made by experienced financial modeling experts.

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About Jason Varner Innovator   Financial Projections Template

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Joined APSense since, February 16th, 2018, From Zurich, Switzerland.

Created on Dec 3rd 2018 04:19. Viewed 259 times.


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