Brief About Financial ModelingJanuary 17, 2017
Financial Modeling, as a career option has recently come in to the limelight, as a result of which there is a great increase in the number of finance aspirants, looking to make a career in this field. The skills of financial modeling have become somewhat indispensable, when it comes to making a career in the very competitive industry of Finance. Financial Modeling basically refers to drawing up of, a number of models, with the help of tools like MS excel and the likes, in order to project the financial statements of a particular company. In order to get an entry into this exciting field, a professional is required to have in depth knowledge about certain concepts such as, Financial Accounting, Equity Valuation and MS Excel. While belonging to a background related to Finance, may seem sufficient education qualification, in this highly competitive world, it does not cut it. This is mainly the reason why, a lot of professional education institutes are becoming popular by the day. Institutes like Imarticus Learning, which excel in offering tailor made, industry endorsed courses in various branches of Finance like, asset management, portfolio management, investment banking as well financial modeling; are soon becoming the go-to choices of a number of Finance aspirants.
Once you have the proper educational qualifications, with a certification in financial modeling, the options are limitless. The various opportunities that can come your way, include that of an Equity Research Analyst, these professionals work quite a lot with financial models before giving out recommendations to their clients. Financial models play a substantial role in Investment Banking as a number of Investment Bankers perform valuations of target companies, before they go on to pitch buyers and sellers. Other fields which have a number of opportunities for those with an expertise in financial modeling include, Credit Research, Project Finance, Portfolio Investments and so on.
Apart from the job opportunities, there is one more important thing that any Finance enthusiast must know. It is that, there are various different types of Financial Models and it is equally important to have an expertise in almost all of them. There is Equity Valuation model, which deals with the intrinsic value of the company, which is basically obtained by using a number of valuation methods like Trading comparable, Transaction comparable and so on. Then there is the Leveraged Buyout Model, which basically any substantial debt funding that is supported by a small portion of a company’s own equity. Project Finance Model, consists mainly of capital extensive projects, wherein professionals are expected to build models, which project estimate future revenues, costs, funding structures and so on. Credit Models are basically used in order to evaluate the credit risk, which arises from different business segments, this type of models are used mainly in financial institutions as well as, credit rating agencies. Apart from these said models, there are some other models, which include payroll, equity dilution, mergers and so on. While it is a fact that financial modeling can be easily mastered by someone, from the field of finance. It is also true that anyone who doesn’t belong to the field of finance, but has sufficient interest in the field can also think of making it into a career option.