Finschool By 5paisa

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Financial modelling is the process of compiling a spreadsheet-based overview of a company’s costs and profits that can be used to estimate the effects of a potential event or choice.

For business executives, a financial model has various applications. It is most frequently used by financial analysts to assess and forecast potential effects of upcoming events or management choices on a company’s stock performance.

These models are designed to be instruments for making decisions. They might be used by company leaders to project the expenses and profitability of a proposed new project.

Financial analysts use them to explain or forecast how certain events, including internal ones like a change in strategy or business model and external ones like a change in economic policy or legislation, may affect a company’s stock price.

Financial models are employed when attempting to value a company or when contrasting it with others in the same sector. They are also employed in strategic planning to evaluate potential outcomes, determine project costs, establish budgets, and distribute resources across the organization.






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