Establishing a financial model is the core work of professional investors to formulate investment decisions. – Financial & Insurance News

Establishing a financial model is the core work of professional investors to formulate investment decisions.

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Financial models are classified, organized, and linking the various information of the enterprise in accordance with the main line created by value to complete the analysis, prediction and evaluation of the company’s financial performance. Excel software is the most mainstream tool for establishing financial models.
Establishing a financial model is the core work of professional investors to formulate investment decisions. Any judgment on corporate prospects, such as sales, profit margins, and liabilities need to be quantified into the financial model, so that the judgment can be transformed into operable data For example, expected earnings per share, future cash flow and dividend, and valuation results. The financial model can provide a complete company and stock analysis framework. Any changes in the fundamentals related to the company have the changes in accounting subjects and financial indicators, and ultimately affect the company’s net profit and cash flow. For ordinary investors, although you don’t have to build a financial model for each company you are interested in, you must learn to see the model data of professionals.
An ideal corporate financial model must have the following five elements (AEIOU five elements): accurate, EFFICient, Illuminating, Organized, Useful)
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