Financial modeling is the process of creating a summary of a company's expenses and earnings in the form of a spreadsheet that can be used to calculate the impact of a future event or decision. It is a representation in numbers of a company's operations in the past, present, and the forecasted future. Such models are intended to be used as decision-making tools. Company executives might use them to estimate the costs and project the profits of a proposed new project.
Financial modeling is important for many different reasons – mostly related to making decisions around mergers and acquisitions, raising capital, planning and managing a business, and making investment decisions. In addition to supporting these major decisions.
