Professional modelling resource will:
- Follow best practice to build models faster
- Save you time and money
- Build intuitive, user-friendly models
- Build flexible, easy-to-update models
- Reduce the risk of costly errors
- Improve decision-making
- Engage management teams
A professionally developed financial model will act as a focal point to:
- Plan for growth
- Price sales proposals & bids
- Set budgets & targets
- Allocate resources
- Forecast cash flow
- Determine business valuations
- Assess investment opportunities
- Model acquisitions
- Raise money
- Identify opportunities for cost savings
- Plan & track restructuring initiatives
- Monitor & communicate performance
Save time and money, reduce risk and improve decision-making
Financial models are used to forecast the performance of an organisation, project, or any other form of financial investment. They model the relationship between various macro-economic, operating, investing, tax, accounting, and financing variables. Most financial models are used to run scenarios in order to test the sensitivity of key outputs to different input assumptions and to predict financial results with greater confidence
Example
Having compiled the five year corporate plan for our PLC client they then wanted to test the impact on projected earnings per share (EPS) of various changes to divisional sales volumes and product pricing assumptions. Using our model they were quickly able to assess the relative sensitivity of EPS to each change in input assumption and focus management attention on the most important levers that could be directly influenced by them.
As we increasingly use models to make business decisions instead of relying on pure intuition, it is vital that these models are constructed according to strict development methodologies. This is the only way to minimise the risk of costly errors and the chance of decisions being made on the basis of unreliable information.
Not only do such models reduce risk, they can also be tailored to an organisation’s specific needs to become a source of competitive advantage.
We are also seeing the emergence of strict legal requirements that require organisations to demonstrate a methodical and controlled approach to spreadsheet development (e.g. the US Sarbanes-Oxley Act 2002).
In addition, today’s investors demand that businesses provide comprehensive details of forecasts that underpin any fund-raising efforts. Increasingly, they want to understand the risks inherent in any business transaction and assess the potential upsides and downsides by quantifying as many variables as possible.
It has never been more important to employ professional modelling expertise.