FINANCIAL MODELING

Creating shareholder value on a sustainable basis is the primary goal of any corporation. The executive team must make decisions and select strategies that will optimize value creation. Therefore, measurement and management of value is a critical function. Valuation is a very useful tool that ultimately links strategic decisions to operational value drivers.

Dynamic, long-range financial modeling enables the measurement of value under various scenarios and strategies, and is used to complement an organization’s strategic plan. Among the benefits realized from financial modeling are:

  • Provides the first step in measuring the company’s value
  • Provides the means of evaluating alternative strategies
  • Helps management understand the building blocks of value creation
  • Identifies leverage areas that can accelerate value creation
  • Helps management make the correct strategic choices
  • Enables smarter and more efficient resource allocation
  • Assists in effectively managing debt
  • Provides a clear roadmap of the future
  • Results in decision making with high level of confidence

The application of financial modeling is not limited to the valuation of an organization as a whole, but can be applied across the various functions of the organization. These include: