Why Financial Modeling and Analysis Services Are Important

Financial modeling and analysis services are indeed crucial to any business, be it a new business or an existing one, to show its performance and forecast financial decisions. And whenever the very term “financial modeling” comes to fore, many businesses think it of a 3 to 5-year financial analysis showing business plan.

Well, this definition is correct to a certain extent, but the financial model is far more broad and extensive. As long as its functions are concerned, it is often used to give vision, obtain early-stage investors, and to offer invaluable information and data about the company to its stakeholders.

In fact, financial modeling is a vital element that determines essential investment decisions, managing cash flows, examining earnings before interest, tax, depreciation, and amortization (EBITDA), and analyzing the quality of earning.

Hence, whether you are a sales or marketing executive or CEO itself, a financial model delivers excellent value to your finance-related decisions.

Also, the model draws the attention of many external stakeholders, such as investors, bankers, private equity firms, and others associated with your organization’s growth.

But, creating efficient financial modeling isn’t an easy task to accomplish. The models often encounter the following issues that undermine their accuracy. People looking for financial modeling also consider Buy and Sell Side Research services to give wings to their business.

Here are some tips to avoid the following problems and create an error-free sheet:

Inactivated Excel Add-inns

You will face a lot of spreadsheet errors when auto-calculation is set to ‘manual’ and “enable iterative calculation.” Here, you need to ensure common Excel add-ins, such as Analysis ToolPak as several excel formulas depend on it. This feature will undoubtedly help you provide accurate calculations.

Complex Excel Formulas

You should not use overtly complex formulas. An over-engineered model can bring you appreciation and applause from your seniors but might be tough for users to understand. Therefore, simplicity is a crucial tenet of great financial modeling.

Inconsistent Cell Formatting

It’s vital to ensure that all numbers are written in thousands all over the spreadsheet to get away with a misspelled naming convention of business units, assets or projects. And you need to be careful with the inclusion of conditional cell formatting to ensure consistency.

Hidden Cells, Rows or Freeze Panes

You should learn to avoid freezing panes and hidden items to guarantee that no important elements are overlooked. This would allow you to make erroneous changes to the complete worksheet.

Embedded Macros

You must keep in mind that not all users of spreadsheets know VBA codes or macros. Hence, you need to be mindful or macros in the model while preparing a model for the general public associated with your business.

Apart from the above-said challenges, there are many other difficulties that you may suffer when building a financial model. So, you can reach Penterra Analytics to get financial modeling as well as Sell and Buy Side Research services.

Penterra Analytics has been providing top class business intelligence and analytics services for a long time in India and abroad.