What is Financial Modeling & Valuation?

Financial modeling is the process of creating a numerical representation of a company's financial performance. Financial models are usually built in spreadsheet software such as Microsoft Excel and are used to forecast a company's financial performance based on a set of assumptions about the future. Financial models can be used for a variety of purposes, such as forecasting a company's revenue, expenses, and profitability; evaluating the financial impact of business decisions; and creating projections for a business plan.

Valuation refers to the process of determining the worth of an asset. In the context of finance, valuation often refers to the process of estimating the intrinsic value of a company or security. There are several methods that can be used to value a company, including the discounted cash flow method, the comparable company analysis method, and the asset-based valuation method. Valuation is an important part of financial modeling as it allows investors and analysts to determine the potential return on an investment and to compare the relative value of different investments.