A financial model accommodates assumptions, historical data, and calculations to support a business decision. Typically built on Excel, these models stimulate the decision-making process. Whether you’re graduating from university, looking for your first job, or a seasoned professional, you must learn how to build financial models. This is a highly in-demand digital skill.

Choosing the Right Course

Financial Modeling is building spreadsheets that detail and forecast historical financial data on businesses to support data-oriented decision-making. These models are typically built in Excel using information provided on financial statements or sourced from external data sets. Common types of models include three-statement operating models, discounted cash flow (DCF) analysis, merger models, initial public offering (IPO) and leveraged buyout (LBO) models, and budgets.

Understanding the difference between the different types of Excel modeling best practices and how they apply to specific business contexts is important. These best practices are designed to help users build error-proof and structurally sound models in their work.

These best practices of an Excel financial modeling course are often taught in the context of an instructor-led course, but virtual courses can be a great solution for students who prefer to learn in their own space or where travel isn’t an option. These courses often include videos, model templates, and supplementary downloadable materials such as tests/exams, certification, and reference material.

Choosing the Right Platform

A successful finance professional must be able to quickly build models and budgets based on financial statements and external data sets. This is a core skill required in virtually all front-office finance roles. However, many finance professionals need formal training on best practices and modeling conventions that can save time, prevent errors, and improve the structural integrity of their models.

For example, most experts recommend separating all hard-coded assumptions into their distinct sections of the model. This allows novice users to easily see what information is being pulled in from a specific source versus what is being calculated by the model. It also helps eliminate ambiguity when reviewing the model’s logic.

Another simple best practice is color-coding all input and output cells in the model. This simple trick instructs novice model users what is being calculated in each cell and makes it easy to identify a circularity error if one arises.

Choosing the Right Instructor

If you want to learn how to build financial models, you will need a good instructor. Many options are available online, but you should choose an instructor knowledgeable about finance and Excel. They will be able to explain complex topics in simple terms and give you the confidence you need to create your models.

Most courses will teach you how to build 3-statement models using real data for companies in different industries and regions. You will also practice interview questions and solve challenging modeling case studies with varying time limits. This course will prepare you for your first internship or full-time job.

Choosing the Right Learning Pace

Unlike software designed to perform specific tasks, Excel is a blank canvas that can be used for a broad range of analyses. However, this flexibility comes with a downside. The quality of an Excel model is only as good as the assumptions that go into it. A well-structured model can be flawed if it contains incorrect or faulty information.