{"id":2340,"date":"2025-07-10T10:34:03","date_gmt":"2025-07-10T10:34:03","guid":{"rendered":"https:\/\/www.edzeb.com\/blog\/?p=2340"},"modified":"2025-07-10T12:18:22","modified_gmt":"2025-07-10T12:18:22","slug":"types-of-financial-models","status":"publish","type":"post","link":"https:\/\/www.edzeb.com\/blog\/types-of-financial-models\/","title":{"rendered":"Types of Financial Models and When to Use Them"},"content":{"rendered":"


\nTypes of Financial Models and When to Use Them? Sounds technical, right?\u00a0\u00a0<\/span><\/p>\n

But let me inform you, if you are stepping into the world of finance, this is one thing you simply cannot ignore. Why? Because everyone relies on financial models from startups to big corporations to plan, predict, and perform. Moreover, understanding which model to use in a given scenario can significantly improve the quality of your financial decisions.<\/span><\/p>\n

In this blog, let us together explore what are financial models, the most common types of financial models and when to use them, minus the jargon.<\/span><\/p>\n

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Table of Contents:<\/b><\/h2>\n
    \n
  1. What are Financial Models? \u2013 An Overview<\/a><\/b><\/li>\n
  2. Why Do Companies Use Financial Models?<\/a><\/b><\/li>\n
  3. Types of Financial Models<\/a><\/b><\/li>\n
  4. Build Custom Financial Models with Excel-Based FP&A Software<\/a><\/b><\/li>\n
  5. Examples of Financial Models<\/a><\/b><\/li>\n
  6. Conclusion<\/a><\/b><\/li>\n
  7. Frequently Asked Questions<\/a><\/b><\/li>\n<\/ol>\n<\/div>\n

    What are Financial Models? \u2013 An Overview<\/b><\/h2>\n

    A financial model is a tool built by using MS Excel. It represents a company\u2019s financial performance using historical data, assumptions, and formulas. To forecast future outcomes such as revenues, expenses, cash flows, and valuation.\u00a0<\/span><\/p>\n

    So simply of the question, what are financial models? You can think of it as a structured spreadsheet that helps professionals make informed business decisions.<\/span><\/p>\n

    Financial models are widely used in areas like investment banking, corporate finance, equity research, and business planning. They help answer critical \u201cwhat if\u201d questions like,<\/span><\/p>\n