What is Financial Modelling?

There are all sorts of complicated definitions of financial modelling, and in my experience there is quite a bit of confusion around what a financial model is exactly.

A financial model is a structure (usually built in Excel) to solve real world financial problems mathematically, containing dynamic and flexible inputs and outputs.


Financial Modelling for Valuations

Building valuation models requires a specialized knowledge of valuation theory (using the different techniques of valuing an asset), as well as modeling skills. If you’re a casual financial modeler, you probably won’t be required to create from scratch a fully functioning valuation model. But you should at least have an idea of what types of valuation financial models are out there.