Top 10 Financial Modeling Skills

let's take a look at the top 10 financial modeling skills that are required to be a world-class financial analyst building financial models is both an art and science and it requires creating a tool in Excel that can be used to evaluate investment opportunities and make business decisions the skills that we're going to go through today fall into three categories broadly speaking it's either accounting and financial knowledge Excel skills or problem-solving logic and design skills all three of these come together to form a very unique skillset that makes you a world-class financial modeler it all starts with accounting skills in order to build a financial model you have to have a solid understanding of a company's financial statements and its accounting policies including things like matching principles accruals and non-cash items as well as revenue recognition with a solid understanding of accounting you really know what the numbers that go into the model mean you also need to be able to interpret and understand the financial statements on top of strong accounting skills it's also important to be very good at using Excel Excel is a powerful tool and we need to use things like keyboard shortcuts to save time and navigate quickly through a model and we have to have a deep understanding of formulas and functions so that we can perform the calculations and the analysis that we need to perform there are many many levels of Excel skills that we can rise to and in CF is financial modeling program we take you to the most advanced level that we believe you need to perform world-class financial modeling the next skill is being able to use formulas to link the three financial statements together the three financial statements being the income statement balance sheet and cash flow statement which form the foundation of the financial model so you have to have a combination of accounting and Excel skills and then the art of connecting the three together in Excel from the three statement model forecasting is then very important to be the future performance of the company out in Excel there are both scientific methods of performing forecasting such as regression analysis and also a real art to forecasting as well when you take into account qualitative factors such as management skills and culture of a business so that's a unique skill set that's required as well from there you need general problem-solving skills as well the general problem solving skills mean you can think in a logical and very organized manner that means you can lay out your financial model in a very clear and easy to follow way attention to detail is extremely important when building a financial model there are so many numbers formulas and functions in the model that you have to be able to keep track of all of them and make sure the model is error-free another important skill in financial modeling is being able to simplify complex information to distill large amounts of data into a simple and easy-to-use format as Leonardo da Vinci said simplicity is the ultimate sophistication and this is very true when it comes to financial modelling and valuation design skills are much more of an art than a science and are very important when it comes to presenting the results of your financial model and of your analysis if you want to get your point across you have to be able to present it in a clear visual manner so that other people understand your analysis and understand the implications of it a good model should always be easy on the eyes and easy to follow with clean formatting beautiful charts and graphs and look extremely professional these are the principles that we always teach in our CFI financial modelling valuation program next our presentation skills once you have a beautiful output from your model you have to be able to create an effective presentation or pitch book that you're ultimately going to deliver to either a client or internally at your company but to some end user who needs to understand the analysis using visuals and a coherent and optical flowing presentation is a great way to achieve this finally point number 10 detail versus high-level strategy is essentially saying the ability to bring it all together the ability to zoom in to very very minutely of detail and then quickly zoom out to a ten thousand foot view to understand the high-level strategy and making sure that neither part is missed that you have this high-level strategic view of the business but yet you understand and have incorporated the very low-level detail that's required to make sure that the analysis is accurate when you're able to incorporate all ten of these skill sets together you then truly are becoming a world-class financial analyst

Channel: Corporate Finance Institute

Views: 134,701

Rating: 4.946909 out of 5

Keywords: top 10 financial modeling skills, how to learn financial modeling, excel financial modeling, financial modeling for beginners, financial modeling in excel, financial modeling, corporate finance, finance training, finance education

Id: cJPpm_SlJwY

Length: 5min 16sec (316 seconds)

Published: Mon Jul 22 2019