How to learn Financial modeling and the required skills
The best way to learn Financial Modeling is through practice, because it gives you experience in building a professional financial model
- First of all, you need some skills and here are some tips:
- You must be professional in Excel
- You must be able to use the keyboard rapidly and avoid using the mouse
- Create simple and clear formuals, and divide complex calculations into steps
- Make sure you know the important formulas and functions are used in Excel
- Use index and match instead of V Lookup
- Use the “Choose” function to build scenarios
- The best way to learn is through using historical financial data for Mature Company and build a fixed model in the future, and calculate the net present value (NPV) of each share. This must be compared with the current share price or target price.
- Formatting:
You must be organized and make sure that your assumptions are clear. This can be done by using different colors in writing, for example, write the assumptions in blue and the outputs in black
- Planning and designing the model:
It is necessary to build the model in a clear, simple and easy-to-follow manner for users. This means that you should build the whole model in a single sheet and then gather everything along
together in order to be able to create different sections. It will also make it easy to expand, collapse or move around the model
- The data must be presented in an attractive and visible format, to make it easy for users to understand