Whois & Analysis for corporatefinanceinstitute.com

Financial modeling is the task of building an abstract representation (a model) of a real world financial situation.

This is a mathematical model designed to represent (a simplified version of) the performance of a financial asset or portfolio of a business, project, or any other investment.

Financial modeling is a general term that means different things to different users; the reference usually relates either to accounting and corporate finance applications, or to quantitative finance applications.

While there has been some debate in the industry as to the nature of financial modeling—whether it is a tradecraft, such as welding, or a science—the task of financial modeling has been gaining acceptance and rigor over the years.

Typically, financial modeling is understood to mean an exercise in either asset pricing or corporate finance, of a quantitative nature.

In other words, financial modelling is about translating a set of hypotheses about the behavior of markets or agents into numerical predictions; for example, a firm's decisions about investments (the firm will invest 20% of assets), or investment returns (returns on "stock A" will, on average, be 10% higher than the market's returns).

Corporate finance is the area of finance dealing with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources.

The primary goal of corporate finance is to maximize or increase shareholder value.

Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.

A financial analyst, securities analyst, research analyst, equity analyst, investment analyst, or rating analyst is a person who performs financial analysis for external or internal financial clients as a core part of the job.

Accounting or accountancy is the measurement, processing and communication of financial information about economic entities such as businesses and corporations.

The modern field was established by the Italian mathematician Luca Pacioli in 1494.

Accounting, which has been called the "language of business", measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators.

Practitioners of accounting are known as accountants.

The terms "accounting" and "financial reporting" are often used as synonyms.

In finance, valuation is the process of determining the present value (PV) of an asset.

Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (e.g., bonds issued by a company).

Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation.