Financial Modeling
The process of creating a mathematical model to represent the financial performance of a company, used for decision-making, valuation, and strategic planning.
Implications
The process of creating a mathematical representation of a company�s financial performance, often using spreadsheets to project future earnings, expenses, and cash flows based on various assumptions and scenarios, essential for decision-making, valuation, and strategic planning.
Example
Example: A financial analyst builds a financial model to forecast a company�s revenue and expenses over the next five years, helping management decide whether to pursue a new business venture.
Related Terms
Different from financial analysis, which evaluates existing data, financial modeling involves creating projections and scenarios to anticipate future financial outcomes.
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