Financial Modeling is a core skill that is almost mandatory for anyone who wants to build a career in finance. It is also important for anyone who wants to start his or her own business and even useful for sales/marketing professionals as it comes in handy in bidding for projects, determining payback/utility of campaigns etc.

Whenever, we need to make a financial decision, we make a projection of what revenue and costs are likely to be and on the basis of such projections, evaluate if that is a wise decision. In a stock market analysis, we look at the past performance of a company as project what the revenue, costs and profit of the company are likely to be and therefore if we should buy, sell or hold that share.

Investment Banking / Equity Research:

Financial Modeling is the basic tool for fundamental analysis and valuations. Investment banker use it to arrive at a valuation in M&A or fund raising transactions. Equity Analysts use it to value stocks and come up with buy/sell/hold recommendations.

Project Finance/Credit Rating:

Financial model help bankers, credit analysts to project future revenues and costs and to make an informed judgment about a projects viability. They are then able to decide if they should extend loans or what the credit rating of a project or company should be.

Corporate Finance:

Financial Modeling is used by companies to assess their own finances and projects. It is hence an input in creating funding plans for corporate projects.

Entrepreneurs/Private Equity:

Entrepreneurs use Financial Models to present their plans to potential investors as much as to plan their strategies. Running different simulations can often be an important tool in avoiding potential risks