Financial modelling is a tool to manipulate your business data to provide realistic forecasting based on “what if” scenarios.
Typically a financial model would be produced in Microsoft Excel and would produce a profit and loss account and balance sheet by month for a period of at least one year. A number of key drivers are identified that help perform the “what if” scenarios. The benefit of the model is it produces a plan and budget. It also identifies cash flow requirements and this enables you to respond to the threats or make the most of opportunities.