What is financial modeling?

Financial modeling is one of the most desired skill sets to have when working within finance. But the meaning and capabilities it entails have now evolved so much more from just being an Excel guru!

Traditionally, a financial model was an Excel-based tool used to forecast the financials of a business based on looking at past performance. From a basic model, much more can be built, but it still remains essential to get the foundations accurate, easy to use, scalable and flexible.

Advanced models include cash flow, mergers and acquisition and leverage buyout – and these models can cause some serious headaches. They are often time consuming to complete, and keeping them accurate can be a pretty laborious task. Fortunately, for the many who have sat battling against the limitations of using traditional spreadsheets, financial modeling has evolved.

Financial models are hugely useful, but only if the information within them is correct. It’s no secret that over 90% of business-critical spreadsheets contain some sort of error. Financial modeling has now progressed, mainly due to the different tools available aiming to make the process simpler and more accurate.

If you’re still using traditional spreadsheets it might be time to start exploring your options… you could be making your job much harder than it needs to be!

Quantrix keeps the three main components of a model separate for logical reasons. You have your separate formula pane comprising your model’s formula. This isn’t as scary as it sounds. In Quantrix, our natural language formula means you actually write 95% less formula than Excel, on average. You can clearly view the logic to your model making processes such as auditing much more efficient.

The structure of Quantrix means your models are fully scalable and flexible. Always-on pivoting enables you to easily view your data in a variety of ways with a very simple drag and drop user interface. You can also complete previously tedious and repetitive tasks with ease. Take adding a year on to a forecast, for example. With Quantrix you can do this just by just pressing one key!

Lastly, the presentation of your model can be easy to view and interpret by everyone across the business rather than just the spreadsheet ninja who built the model! A new, interactive view of your model enables your users to easily create those ‘what if’ type analyses to generate real value from your data in real time. Increasing the value of a financial model really comes from making sure your model is 100% accurate, as well as giving business decision makers the ability to use and understand the findings.

Have you ever taken a look at the value of your financial models? Chances are, there’s a lot of uncovered usefulness if you’re using traditional and now dated technology. Although there’s a catalogue of financial modeling courses now available, you should also consider a next-generation tool, such as Quantrix, which can make your financial modeling much simpler – right from the word go.

Don’t believe us? Try Quantrix for yourself with our free 30-day trial. You’ll be amazed at what you can achieve!

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