From the course: Financial Modeling Foundations
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Modeling in corporate finance - Microsoft Excel Tutorial
From the course: Financial Modeling Foundations
Modeling in corporate finance
- [Instructor] The two major areas of finance are corporate finance and investments. Financial modeling is important in both areas. In the corporate finance world, we care primarily about the cash flow statement, the income statement, and the balance sheet. But, we want to use these pieces of accounting information as the basis for financial models that we build to answer finance questions. Questions around valuation, questions around risk, questions around investments that the company might make. We're gonna begin any corporate finance model by taking the historical financials, and then making assumptions about what the drivers are of those financials. What are the drivers of sales, of costs, and of profitability? We can then distill those drivers down in a financial model, and that allows us to go through and begin creating the different components in the financial model. In particular, any corporate finance model needs to have four main areas: some sort of an analysis of revenue…
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