What Are the Different Types of Corporate Finance Models?

The so-called financial model is to classify, sort and link various types of information of an enterprise in accordance with the main line of value creation in order to complete the functions of analyzing, forecasting and evaluating the financial performance of the enterprise.

Financial model

(Financial concept)

Right!

The so-called financial model is to classify, sort and link various information of the enterprise according to the main line of value creation to complete the

Establishing a financial model is the core work of professional investors in making investment decisions. Any judgment on the company's prospects, such as sales,

Generally speaking, a complete financial model should contain at least three basic components:

However, in order to make the financial model a weapon in the practice of value evaluation, the valuer must also have the ability to use this tool, which mainly includes three aspects: first, the basic financial knowledge, which includes both traditional

The financial model can provide a complete company and stock analysis framework. Any changes in the company's fundamentals will have corresponding changes in accounting subjects and financial indicators, and ultimately affect the company's net profit and cash flow.

The use of computer software (such as Excel) can greatly reduce the intensity of the compilation of financial models. Although ordinary investors do not have to build financial models for each company they are interested in, they must learn to look at the professional model data.

Of course, the financial model is not a panacea, just as good transportation is a necessary condition rather than a sufficient condition to reach the destination. If you get lost, no matter how good the transportation is, it will not help. To complete the analysis and judgment of corporate value, the valuer's understanding and vision of specific industries, and knowledge of specific companies are indispensable or even more important. Financial models are to make the above conditions better Means and basis to play a role. But without a financial model, no other conditions can be fulfilled.