Financial modeling is best demonstrated as a prognostic report that projects a company’s financial performance based upon previous benchmarks and generalized presumption. Financial analysts, investment bankers and research analysts collectively use this report to assess future funds and resources to ensure financial security within the company, all within Excel.

Using Excel, there are a variance of segments to help complete your model; some examples are historical data/assumptions, income statements, balancing and many more. However, on the basis of a foundational level, professors are introducing their students to using spreadsheets to analyze data, model techniques, valuation tactics and forecasting procedures; throughout these teachings, students are learning industry-level knowledge to benefit them in the workforce. Some examples of core lessons finance model professors are teaching are:

Historical Data: This information is vital for making accurate financial forecasts using previous series of financial events. With this data, analysts are able to ‘assume’ the fiscal outcome of a company for the future. Using, generally, 3 years of data, an assumption is built through reverse engineering the prior data, such as gross income and inventory, to successfully forecast the revenue.

Building the Income Statement: The subsequent step to building a financial model is creating an income statement. Using the assumptive insight from the historical data, you can determine key information such as gross profit, revenue and much more.

With these key examples of developing a financial model, Excel is an obvious essential tool to help collate this information, hence why financial modeling professors utilize the software. Combined with ExPrep, you’re able to syndicate your lessons and coursework within the program to encourage a more streamlined method of teaching. The process becomes a time saver for the professor, while mutually benefiting the student in terms of educational feedback and velocity. Are you interested in learning more? Click the graphic below to schedule a live demo with a member of our team.