What is financial modeling?

Financial modeling is the task of constructing Excel-based quantitative models, illuminating the financial and operational landscape of a business. Proficiency in spreadsheets is crucial in the corporate world, particularly within finance. With financial modeling, one can predict the future performance of diverse financial entities ranging from assets and portfolio to entire businesses and projects. 

As financial models become an integral part of business and decision-making, their accuracy and reliability are paramount. Nevertheless, financial modeling presents its own challenges, and any errors or inaccuracies in this field can have significant repercussions. This blog describes some of the challenges confronted by financial modelers and the best practices to help overcome them. 

How to overcome these challenges?

Although the financial modeling challenges may seem daunting, they can be overcome by following some best practices. These practices are designed to ensure transparency, comprehension, and precision in your financial models. Some of the best practices include setting a clear objective, simplifying the model for clarity, ensuring data integrity, conducting regular reviews and tests, documenting the process, and providing adequate training. Acquiring financial modeling skills from accredited training programs empowers individuals to significantly advance their proficiency in implementing these best practices. 

If you’re looking to enter the world of financial modeling, join our certification program in Advanced Financial Modeling. 

At Kaplan, you will learn how to build a fully integrated financial model from a blank Excel sheet. Through analyzing various financial statements, under the guidance of an industry expert, you will develop a core skill required by top finance professionals around the globe. Don’t miss out on the opportunity to enhance your expertise and take your career to new heights.