Financial modeling – a valued skillset

edupristine (CFA FRM PRM FM training institute)   (325 Points)

26 September 2012  

 

Financial Modeling – A valued skillset

 

“Financial modeling” is one hot topic of recent years. The term usually refers to creating an integrated model of a company’s business and financial data within a set of spreadsheets – normally with Microsoft Excel.

Investment banks, or more specifically: their equity research departments have been using detailed financial models for their forecasts and valuations for ages. However, the development of financial modeling as a service offered by specialized providers is more recent. This was mostly driven by investors asking for more reliable business plans to base their decisions upon. But also, although it may seem trivial, a lot of today’s financial models would have remained unthinkable with technical limitations that were only lifted with Excel 2007 – such as the ridiculous limitation to 256 columns. Across all industries, Excel remains the single most important tool for financial modeling purposes, with only some specific tasks being solved in Access or other, more specialized software.

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