Financial Modelling

Model construction

Many "home-built" models work well to do what they were designed to do. But with a little rigour in design the model is more likely to cope with that sudden realisation that the need is for something slightly different. Over a period of time the need is likely to change more than slightly. It is then that good design shows. The way in which the model works will be clear (possibly even documented!) and changes can be made efficiently. Poor design leads to lots of wasted time in trying to make changes, and finally generating a new model and enduring the resulting familiarisation process. Good modelling design is built-in from the beginning.

Financial forecasting

Forecasting financial performance involves taking a set of assumptions for the key business drivers and translating that into a set of financial results. Forecasts can be as detailed or as broad-brush as desired. What is vitally important in forecasting is that the causal relationships are well understood and incorporated effectively into the model. Some "good enough" relationships really are good enough ? others lead to results being, potentially, misleading. The only way to be sure is to apply an understanding of how the company (or project) works financially and to incorporate checks.

Accounting implications

In our experience, some of the difficulty arising in producing a financial model is not associated with using the software or the idea of forecasting; it concerns an understanding of the accounting implications of a particular set of events. Our modelling courses are intensely practical, getting delegates to build their own models using templates provided. In this way, each delegate has to meet a variety of problems in completing the model, and solve those problems. Of course, tutorial support is on hand!