Building a Financial Model

Building a financial model in Excel can be very tricky as there are many aspects to consider in order to make the model truly great and adhere to best practices. The model should be built to suit its intended purpose, show flexibility and allow to run different scenarios which requires a fully integrated dynamic model in Excel.

Find the best strategies and resources you might want to try when building a financial model. eFinancialModels offers truly great resources, templates and assistance in financial modeling.

 

Things to consider when building a financial model in Excel
Things to consider when building a financial model in Excel

Financial models in excel require to consider the following components:

  • Definition of the Purpose
  • Model Format
  • Model Structure
  • Model Checks
  • Operating Model
  • Things to Avoid
  • Debt Schedule
  • Fixed Asset Schedule
  • Financial Statements
  • Financial Ratios
  • Direct Cash Flows
  • Discount Rate
  • Discounted Cash Flow Valuation
  • Key Financial Metrics
  • Scenario Analysis
  • Executive Summary

Building a financial model becomes much easier when starting from a good template. Financial modeling examples in Excel can be found here.

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