21 Nov 2014

Financial Modelling: Model Design

Best Practice

Ultimately, the best practice is to invest time, thinking about a model before it is built, focusing on what it is needed for and what is the best way of structuring the model in order to achieve its objectives. The more time spent thinking about a model at the outset will save time later in the production process; remember that computers do not think, so we have to do the thinking for them. Once the objectives of the model have been thought about and the structure of the model set, the next most important rule to bear in mind when building a model is to keep it as simple as possible! Ask the following questions constantly when building any financial model:

Although a model will always reflect the way that the designer thinks, there are a few steps that can be taken to ensure that somebody else could use, and improve the understanding of, any model. Utilising these steps will also help to minimise errors:

1 comment:

  1. Financial ModellingAnalysis is then used to build financial model for a company, which in turn plays an important role in projecting a future financial performance
    Based on this model, company investors can come to conclusion at a suitable valuation for the companies.
    Such research analysis is used in the areas of equity research / investment banking / financial KPOs that are assisting equity research firms / investment bankers, financial advisory firms.

    For More info: http://careerafterbtech.com/financial-modelling/