What is the Scope of Financial Modeling?
The extent and scope of financial modeling services in businesses have increased during the last two decades. It’s not your typical accounting or auditing job. It entails analyzing data and developing financial models to forecast and predict market movement in the future. When it comes to financial modeling, India is termed as an immature market because big companies and many start-ups keep swinging because they lack financial modeling in their business. As a result, it’s no wonder that financial modeling skills have become the most in-demand among today’s finance professionals.
Short supply and high demand emphasize the importance of financial modeling and valuation for anyone interested in a career in finance. Let’s define financial modeling before diving into the scope of financial modeling and the specifics of its application.
Financial modeling is the task of estimating the financial performance of a business by taking into account all relevant factors. It is the process of creating a summary of a company’s expenses and income in the form of a spreadsheet to calculate the impact of future events or decisions
It helps the user to obtain a brief knowledge of all the variables involved in financial forecasting. Similarly, “financial modeling” is a broad term that can mean different things to different people; it usually refers to either accounting and corporate finance applications or quantitative finance applications.
Financial modeling is a mathematical activity that can be used for asset pricing or corporate finance. It entails translating a set of hypotheses regarding market or agent behavior into numerical projections. While there has been some discussion in the industry about whether financial modeling is tradecraft like welding or science, the task, and scope of financial modeling have grown in acceptance and rigor over time.
Why Financial Modeling is Important for Business?
Businesses are adopting financial modeling practices to grow and predict their earnings, and hence the scope of financial modeling is high. It has become one of the most preferred skills in today’s world. The demand for a financial modeling analyst is increasing every day. It has opened the door for finance professionals. Research reveals that the crucial skills required by finance professionals are proficiency in finance modeling.
It signifies the scope of financial modeling is greater than ever. In the corporate sector, financial modeling is the most important component for making big business choices. Financial models are the most significant tools for obtaining ideal results and implementing business decisions.
A model can help you find out the intensity of risk involved in making particular decisions. They can also be used to create an effective financial statement that accurately displays the company’s finances and operations. These models assist online internet businesses in making more confident selections.
- The Scope of financial modeling is quickly expanding in the finance business.
- Financial modeling is a key tool for cost-effectively estimating business ideas and risks.
- Financial modeling is the process of developing a visually appealing depiction of a company’s financial status.
- Financial models are mathematical expressions that are used to illustrate a company’s economic performance.
Get ready for a racy career ahead with this financial modeling skillset under your belt. Learn from our expert faculty with our in-demand Financial Modeling Course.
Scope & Career in Financial Modeling
Banks, equity research businesses, credit rating agencies, and project finance firms, all hire financial modelers. They work in the core area because a financial model’s output is utilized for decision-making and financial analysis both inside and outside the organization.
Anyone in the organization who deals with business development, vendor development, operations, profitability, MIS, tendering, and marketing could start the financial modeling tradition because modeling abilities are easily acquired. Financial Modeling is a highly sought-after financial subject and the scope of financial modeling is vast.
Since the financial world is always changing, it is crucial to be equipped with the tools that are used in Financial Modeling. Financial Modeling covers a wide range of issues in-depth, which aids in the smooth operation of a corporation. Valuation, pivot tables, macros in Excel, and other topics are covered in the Financial Modeling course.
There are various work prospects available after completing the Financial Modeling course. A finance professional can start working with stock research firms, government agencies, non-profit organizations, and other financial institutions.
Career Options Available After Completing the Financial Modeling Course Are as Follows:
- Investment Banking
Investment banking has emerged as one of the lucrative highly paid careers in today’s world. Be it a business person or a working professional, everyone is focusing on investing and growing their money. You can choose a career in financial modeling to be a part of the investment banking field.
Being an investment banker you would get the opportunity of working with Big Banks, private financial institutions, Govt, and large corporations by building complex Excel models. This Financial Modeling Job opens the ground for the use of Excel models to value companies for M&A and consulting assignments and also improves the Scope of financial modeling.
- Equity Research Analyst
Equity research analyst is a challenging career option because the job demands preparing financial models by analyzing data, market research, and preparing detailed research reports on the stock market industry. It requires in-depth knowledge of financial products to help investors with major decisions involving, buying, selling, and possessing a certain investment. Companies make investment decisions in a particular sector based on research reports provided by analysts.
- Financial Planning and Analysis
The scope of financial modeling is becoming more prevalent in the realm of financial planning and analysis. All corporate forecasting is primarily handled by a Financial Planning & Analysis (FP&A) professional. They give decision-making analysis on all operational, financial, and strategic problems. A strong applicant possesses a strong analytical mentality as well as technical proficiency and outstanding interpersonal abilities.
- Corporate Finance
A profession in corporate finance can be pursued after completing financial modeling. A corporate finance expert is in charge of the company’s day-to-day financial operations, from accounting to making financial decisions such as requesting or granting loans, determining the credit tenure of debtors, investing in long-term or short-term assets, and allocating financial resources.
Financial modeling certification helps you to build a career as a credit analyst. The primary responsibility of a credit analyst is to evaluate an individual’s or company’s creditworthiness. Credit analysts examine a customer’s financial information, such as earnings and payment history, to determine their capacity to meet financial obligations.
- Financial Analyst
One of the well-known career options in the field of financial modeling is Financial Analyst. What do financial analysts do? A Financial analyst is responsible for a company’s financial planning, analysis, and projections. They Forecast the future income and expenses to structure the project capital budgets.
Starting Salary in Financial Modeling
There are several professional courses are available in the finance sector. The Scope of Financial Modeling and the demand for financial modeling professionals is increasing day by day. Almost every business nowadays needs financial modeling expertise to analyze the performance of financial assets and make investment decisions.
Financial modeling is a useful ability to have. When it comes to financing employment, businesses look for people who are familiar with financial modeling as well as the fundamentals of business valuation, project finance, and portfolio management. Salaries differ by organization and industry.
We can’t speak on a precise compensation figure, but we can tell you that banking and analytics firms would love to hire a fresher with financial modeling knowledge to assist them construct risk models with diverse features and closing the gaps.
You can expect a start from Business Analyst level, then the starting salary can be 4–5 lac p.a (assuming you have done your graduation in B.Com if you are an engineering graduate it can be 10–20% higher)
Financial Modeling Certifications
The Scope of financial modeling is growing, and many reputable institutes are now offering financial modeling certifications
Best Courses and Certifications in Financial Modeling
- Business and Financial Modeling Specialization certification on Coursera offered by Wharton
- CFI Certified Financial Modeling & Valuation Analyst (FMVA)
- Beginner to Pro in Excel: Financial Modeling & Valuation course offered by Udemy
- Business Statistics and Analysis Specialization course on Coursera offered by Rice University
- IMS Proschool FM certification course
1. IIM SKILLS
When people look for online courses, IIM Skills is the name that comes on the top. It is a prestigious institute that has been teaching students to live their dream careers since 2015. Till now, more than 35 thousand individuals have taken advantage of their brilliant training programs.
With every passing day, they make efforts to update their courses according to the trends in order to assign the best learning with the latest strategies that the industry demands. If you want to be updated with the most required tips and tricks to sustain yourself in the field of finance and are eager to upskill yourself, IIM Skills is a perfect choice for you.
Structure of Financial Modeling Course
It is a 3-month course that covers Excel, accounting, financial statements, ratios, KPI analysis, modeling indexing, different types of financial models, business valuation, forecasting, etc.
- 50+ hours of live interactive sessions
- 100+ Hours Practical Assignments
- 5+ Case Studies
- Internship Opportunities
- Dedicated Placement Cell
- Fees: 39,900
2. IMS Proschool Financial Modeling Certification Course
IMS, since 1977, has worked towards building a long-term successful career for its students. It emerged as the fourth most trusted education brand. They provide skilling programs in Finance, Accounting, Analytics, and Marketing largely to graduate students. They also have programs in Electrical, Mechanical, Retailing, and Healthcare domains under the PPP model.
Another alternative certification program is the IMS Preschool Financial Modelling certification course, which is offered in collaboration with the NSE Academy and the National Skill Development Corporation (NSDC), the Ministry of Skill Development, and the Government of India. The IMS preschool training program, which is available in both classroom and online formats, has trained over 6000 students across India.
Course Structure for Financial Modeling Certification
Excel proficiency, financial statement analysis and ratios, financial management, and corporate finance, project finance modeling, stock research modeling, report writing, and sector overview will all be covered in this course.
Working professionals have a variety of learning alternatives, including offline/online classes and weekly workshops.
- 70+ hours of instruction, 24-hour access to study materials
- 100% placement aid, training by industry professionals
3. Business and Financial Modeling Specialization Certification on Coursera Offered by Wharton
The prestigious Wharton School at the University of Pennsylvania offers this Business and Financial Modeling Certification specialization for anyone looking to improve their spreadsheet and financial modeling skills. It introduces students to spreadsheet models, modeling methodologies, common investment analysis, company valuation, forecasting, and other applications.
It teaches students to utilize spreadsheets to create scenarios, estimate performance, and make informed business and financial decisions. The course aims to make students understand the scope of financial modeling. This specialization’s curriculum is divided into five courses, each of which includes numerous demos, quizzes, practical exercises, and a final Capstone project, all of which combine to provide not only theoretical understanding but also extensive practical experience.
The classes’ real-life examples aid in a far better comprehension of the ideas. Six senior Wharton faculty members from accounting, statistics, and finance disciplines will teach the courses. They are known for their research and have produced multiple books on business and finance.
This is the finest Coursera financial modeling course if you’re trying to start or move into a new job in financial analysis and modeling, or if you’re an entrepreneur looking to grow your business by learning financial analysis skills. It is also highly valuable for current finance professionals who want to improve their analytic and modeling skills.
- Understand the fundamentals of quantitative modeling and be able to construct your models
- Learn how to use spreadsheets to map and predict data
- Learn how to incorporate risk and uncertainty into your models
- Structure your decision-making for the best results
- Understand risk measurement and management
- Model current realities, possible risks, alternate scenarios, and projected performance in business scenarios
Course Duration: 2 months, 10 hours per week
Recommended Read: Financial Modeling Courses in India
4. Beginner to Pro in Excel: Financial Modeling & Valuation course offered by Udemy
This excel modeling course is the finest among Udemy financial modeling courses, with over 112000 students enrolled and a good rating. This course promises to make learners Excel masters with over 12 hours of video instruction and 534 downloadable tools.
It teaches how to create reliable financial models and provides an in-depth understanding of company valuation processes. This course contains the following topics to provide the best knowledge of Excel to beginners.
- Excel training for beginner and Intermediate
- Advanced level Excel functions, Pivot tables, Formatting, and Charts
- Financial Model building
- LBO Valuation Models and Discounted Cash Flow
- Case study on Capital Budgeting
The training materials are well-designed and simple to comprehend. Professional chart examples, such as those used by big banks and consulting organizations, are included in the text. This course is ideal for anyone who wants to learn how to use Excel in a real-world setting.
- Become familiar with Microsoft Excel and its advanced features.
- Create P&L statements from raw data extraction
- Create Cash Flow statements
- Create Valuation models from scratch
- Create models with multiple scenarios
- Learn how to value a company
- Create professional and attractive advanced charts
- No prior experience is required to complete the course
- Regularly updated content and study material
Duration: 12 hours of video
5. Business Statistics and Analysis Specialization Course on Coursera Offered by Rice University
Rice University’s Jones Graduate School of Business offers a Business Statistics and Analysis specialization. It consists of four courses and a capstone project that provides learners with crucial conceptual and practical abilities in data analysis and modeling for business applications utilizing Excel spreadsheets.
Learners will grasp core spreadsheet functions, generate descriptive business data measurements, and develop an aptitude for data modeling, in addition to gaining a basic understanding of business and financial data analysis tools and procedures.
Basic probability concepts, including measuring and modeling uncertainty, employing diverse data distributions, and the Linear Regression Model to assess and advise business decisions, are also covered in this specialization’s courses.
This Specialization Occurs at Three Levels at the Same Time
- Learners obtain a theoretical understanding of numerous tools and techniques used in business data analysis and modeling, with an emphasis on why they are needed rather than becoming bogged down in the minutiae.
- Participants have hands-on experience with the tools, which include core data analysis tools, Excel spreadsheet tools, and numerous corporate statistical tools.
- Students use the tools they’ve learned to interpret and analyze data from a variety of business operations.
Because this is an introductory specialty, no prior knowledge or experience is required. It is appropriate for people who have no or limited functional knowledge of Excel, as well as those who use Excel regularly but only in a peripheral capacity and want to improve their skills.
- Develop a thorough understanding of the tools and procedures used in business data analysis.
- Learn how to use Excel and how to use sophisticated functions and formulae.
- Understand and design various charts such as line, bar, and pie charts, pivot charts, scatter plots, and histograms on your own.
- Learn how to create and estimate a regression model in Excel.
- Learn relevant and practical skills that you can apply right away in your profession and across a variety of industries.
- Real-world data demonstrations, exercises, and practical tasks are used to teach.
- You’ll complete a capstone project in which you’ll apply what you’ve learned to a real-world challenge.
Duration: 14 hours per week, 2 months
6. CFI Certified Financial Modeling & Valuation Analyst (FMVA)
The Financial Modeling & Valuation Analyst (FMVA) Certification from the Corporate Finance Institute is for highly motivated financial analysts who desire to bridge the gap between formal schooling and becoming world-class financial analysts. This financial modeling training program is designed to give students a solid foundation in financial modeling and valuation.
CFI boasts that its graduates work for major corporations such as Citibank, Amazon, Deloitte, PWC, Morgan Stanley, JP Morgan, CitiBank, HSBC, and others. With over 24 courses, hundreds of Excel and PowerPoint templates, and over 100 hours of video training, this is an extremely thorough package.
It includes a variety of hands-on exercises, quizzes, and evaluations in addition to the video lectures. To finish the program and acquire the FMVA credential, students must pass all of the course examinations with a minimum passing grade of 80%. The curriculum is set out like an online degree, with core courses and a wide range of electives.
Financial Analysis Fundamentals, Building a Three-State Financial Model, Business Valuation Modeling, Budgeting and Forecasting, FP&A Monthly Cash Flow Forecasting, Scenario and Sensitivity Analysis, Dashboards and Data Visualization, PowerPoint and Pitch books, and Advanced Financial Modeling & Valuation are among the core courses.
- Develop industry-leading best practices for financial model layout, design, and structure.
- Understand accounting, finance, and financial analysis topics.
- Improve your Excel spreadsheet skills.
- Learn everything you can about presentations, graphs, and charts.
- Learn advanced modeling techniques such as scenario analysis, sensitivity analysis, accretion/dilution analysis, and more.
- Use comparable company analysis, precedent transactions, and discounted cash flow to value a company. Modeling using DCF
- Compare the advantages and disadvantages of various valuation techniques and become adept in all of them.
- Learn skills and knowledge on the job that would otherwise take years to learn.
Duration: Self-paced, Students have lifetime access to the entire CFI library
Recommended Read: Business Accounting and Taxation Courses in India
How to Choose the Right Financial Modeling Course?
The scope of financial modeling is growing so choosing the right Financial Modeling courses on various online learning and offline platforms is crucial. Though online classroom courses are location agnostic and can be attended from anywhere, location-specific Financial Modelling courses have greater completion rates, but they are slightly more expensive and use more bandwidth due to the increased travel time.
When evaluating Financial Modelling courses, consider a variety of factors such as the provider’s brand, pricing, course duration, and curriculum. Before making a final selection, you should read reviews of Financial Modelling Courses. It’s an investment in your professional future.
Candidates with a professional certification in financial modeling can expect to work in one of the following roles:
- Business Analyst
- Finance Manager
- Project Manager
- Investment Partner
Q. What is the difference between Financial Project Finance Option & Financial Modeling?
These are two distinct training options. The Financial Modeling course focuses on using Excel to create integrated financial models. This course is taught using a case study from the manufacturing business. The Project Financial course will teach you how to use Excel to develop project finance models. We use an example of a real estate project to learn by modeling it in Excel.
Q. What are the main objectives of financial Modeling?
(1) develop assumptions about how a business will perform in the future, (2) project a financial prediction, (3) link a company’s historical financial statements (4) assess a company’s worth (5) Recognize the cash flow profile’s sensitivity.
Q. What is the scope of financial Modeling?
Well, there are many options like applications, mergers, acquisitions, capital raising, budgeting, investments, etc.
Q. Opportunities for financial modelers?
Financial modeling abilities have become one of the most highly sought-after for finance professionals today, regardless of their degree. The good news for candidates is that supply is limited and demand is high.
Q. What are the financial models’ limitations?
The excessive use of future assumptions, (2) the substantial reliance on a terminal value that makes up so much of the net present value of a corporation, and (3) the reliance on the weighted average cost of capital are all constraints (WACC) WACC WACC stands for Weighted Average Cost of Capital and represents a company’s total cost of capital.