What is Financial Modelling in Excel ?.

After doing MBA in finance or working as Finance professional in any organization you should know financial modeling which is used for business, in fact making a financial model is not difficult, but sometime company owner wants a perfect model which can be sometime complicated.  There is no perfect model in financial modeling, some time even a simple model  is better than a complicated model.

As a financial consultant you should know during the merger and acquisition process, the apparaisal need financial model to review the prospect of the company, there are few points one should remember while making a financial model for the company.

Set the assumption of revenue, growth , expense, inflation, interest etc.
Make profit and loss model, begin with sales assumption and fill up the expenses, raw material expenses or cost of goods sold, general expenses, interest and taxes etc.

Set a balance sheet which is linked with your profit &Loss account, you can make balance sheet model by multiplying recent balance sheet with assumption.

Make a cash flow statement after balance sheet it will be easy  to make cash flow statement, calculate the cash flow or cash outflow from different balance sheet and income statement.