Financial modelling is the act of making a summary of the incomes and expenses of a company. These models are mostly made out of spreadsheets for predicting future results and its impact. Financial models can help study a company’s performance in the stock market; the data can be studied for predicting possible growth or ventures in the future and how it will perform in the stock market. Financial models are often built for company valuation and business estimation purposes.
If you are interested in this career choice, you may sign up for a financial modelling course to get started. In this article, we will discuss the career prospects students can explore with a degree in financial modelling.
- Investment Banking: Investment banking is popularly associated with the financial modelling career. Investment bankers need to frequently make financial models on Excel to calculate company valuations for mergers and acquisitions, raising funds. They work with big public corporations, private corporations, and private equity firms.
- Equity research: Equity research analysts are experts in making financial models, performing analysis of companies, and industry research. All these elements collectively form a report that is sent to the clients to help them decide whether they would make an investment in public security or not. Naturally, these professionals are proficient in Excel.
- Financial planning and analysis: Financial planning and analysis (FP&A) involves budgeting and forecasting using analytical processes that are beneficial to an organisation’s financial health. Financial planning is essential for business strategies to function smoothly. The FP&A conducts an analysis of financial data and operational data to help an organisation align its business processes with its financial goals. This is essential for evaluating the progress of the same goals. FP&A is heavily reliant on statistical analysis of data.
- Corporate Development: Corporate development groups work mostly in large public companies. Professionals in corporate development are responsible for capital raising, mergers and acquisitions. They also often work closely with investment bankers on transactions. For executiving these transactions, corporate development professionals need to have excellent financial modelling skills. They are as a result very proficient in Excel.
- Venture Capital: Venture Capital firms make investments in high-growth companies and use financial models for estimating the value of these businesses. Venture capital firms always invest in a company in the early stage. They focus on the opportunity of the market and the fundamentals of the business like its cost structure, revenue model etc.
- Real estate development: Real estate developers build detailed financial models for determining the profitability of a real estate development project. Real estate professionals build traditional cash flow analysis and calculate the IRR or the internal rate of return of a project. It requires considerable skills in financial modelling. Real estate analysis also takes into account what degree of leverage is required for completing the development.
The future scope in financial modelling is full of opportunities. Join a program today and get started for a wonderful career.