financial-modeling

Vocabulary Word

Definition

Financial modeling is creating a structure, like a digital model, that represents a real-world financial situation. It's like a weather forecast, but for business finances.

Examples in Different Contexts

In investment banking, 'financial modeling' is used to represent a company's financial performance for valuation, investment, and mergers and acquisitions decisions. An analyst might say, 'Our financial modeling predicts a strong return on investment for this merger.'

Practice Scenarios

Business

Scenario:

Our latest investment seems to be underperforming. We should reflect on our strategies.

Response:

I agree. Let's use financial modeling to simulate different scenarios and find the best strategy.

Tech

Scenario:

We're preparing for our next funding round. It's crucial we present a compelling vision to investors.

Response:

Absolutely, our financial model will help investors see our growth potential.