Financial modelling plays a key role in helping businesses keep track of their financial transactions. A model consists of financial data—assets, liabilities, equity, income, expenses, cash flow, etc.—where analysts draw valuable insights to understand an organisation’s financial health and help them make smart, informed decisions.
With the value it contributes to businesses in various industries, it’s no wonder that financial modelling is a new emerging service that’s in-demand today. Judah Karkowsky is also in favor of it.
Continue reading for some of the most in-demand financial modelling services.
Equity Research
Equity research is used to provide investors with a comprehensive analysis and timely recommendations on whether to invest in a particular business. An equity research analyst employs problem-solving skills and data interpretation to identify patterns, opportunities, risks as well as develop tools to help manage that risk. Investment banks and other financial institutions often have a team of analysts to provide their clients with high-quality information and analysis.
Private Equity Analysis
Private equity is the capital investment made into a business that is not publicly listed or traded. It can be sourced from high-net-worth individuals and firms that buy shares and assets in private companies or gain control of public companies with the goal of privatising and delisting them from the stock exchange. A private equity analyst performs similar work as an investment company, wherein they conduct research using financial modelling techniques and valuation methods to derive interpretations and assess the advantages of investing in a private company.
Credit Analysis
With expansion plans, businesses will have to look for ways to raise capital. This can be done by issuing bonds, stocks, or applying for loans. Investors and lenders can use credit analysis to determine the ability of the business to repay its financial obligations, particularly in the event of bankruptcy. It can also be used on individuals applying for loans or mortgages.
Financial Planning & Analysis
Financial planning analysis (FP&A) gathers and analyses financial data of a business to create a data-driven forecast of the company’s financial performance in the upcoming year. This information is also essential to determine the effectiveness of the organisation’s current strategic plans and investments and make changes where possible.
Corporate Development
Planning and executing strategies to grow the business is at the core of corporate development. Professionals in this field are responsible for establishing strategic partnerships and creating opportunities through merges, acquisitions, divestitures, and capital raising, to name a few. Larger firms usually have their corporate group, but those without can benefit from outsourcing this service.
There are far more services that rely on financial modelling. It forms a core of various other finance fields like banking and investment. Nevertheless, all financial models are built for the same purpose: gain a better understanding of the business and help them assess the long-term viability of their efforts, take control of their cash flow, and develop benchmarks to measure the performance of their products, services, and processes in future forecasts.
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