What are the different types of company finance models?

Corporate finance models are formulas or processes that the company passes to measure different financial parts. Common models include dividends, financing or current assets. The model offers a repeatable process to calculate budget information, project awards and capital structure. Corporate finance models also provide measurements for the sensitivity and planning of scenarios. The use of tables or computer programs can help companies to complete these activities quickly. For example, the company may have to evaluate more projects. Entering data associated with each of them allows the table to calculate the expected output of the internal table. The output provides specific data that managers use to assess each potential project. Computer programs work in a similar way, except that they can have more detailed analysis outputs.

Dividend Corporate Finance models allow the company to determine the amount of dividends to pay from profits. DivideDy are often small payments made by the company to shareholders of the ordinary shares. This financial model is responsible for dividends as part of the costs associated with the financing of its own capital. Companies must understand this number because it is a cost that does not necessarily bring value. The financial model often calculates the total dividends paid, how to pay and the frequency of payments made to shareholders.

Project Valuation Project Valuation Models provide specific information to selection of value added projects. These models often compare the costs needed to start a project with potential financial revenues. Both comparisons can provide profitability for each project. Companies can then choose a project that is the most profitable and has increased and has increased the wealth of business for business. Each model usually requires the same information for model inputs.

Capital structures of corporate financial models are secondary and often work in tandem with project valuation models. These models compare the costs of each possible project and create an analytical structure for financing each, especially through the debt or financing of their own capital. For example, a company that needs external funds often looks for loans, bonds issued to investors or shares sold to investors who will finance the project. The capital structure model allows the company to determine what mix is ​​necessary to maximize external funds used for projects.