Keys to Building a Dynamic Financial Model
This article by Ben Wann discusses the keys to building a dynamic financial model. He emphasizes the importance of keeping the model flexible, accurate, and scalable. He suggests that a dynamic financial model should be based on the company's strategy and should be regularly updated to reflect changes in the market and the business environment. He also provides tips on how to create a dynamic financial model, such as using assumptions, building in scenario analysis, and using sensitivity analysis.
By following the steps outlined in his article, you can build a dynamic financial model that can help you understand a company's financial situation and forecast its future performance.
1. Know your audience
2. Define the purpose of your model
3. Keep it simple
4. Build dynamically
5. Validate your model
6. Be prepared to adjust
Interestingly, these keys to building a dynamic financial model, also point to how financial models outgrow Excel over time as they increase in size, complexity, and audience. As models need to address more dynamic business requirements, more sophisticated computations, and a broader section of an organization, it becomes challenging to continue to use Excel. A more advanced collaborative planning platform can help keep up with these demands.
A collaborative planning platform will help you:
- Adapt to business requirements quickly using multi-dimensional tools
- Collaborate securely and effectively across teams
- Integrate your data sources into a single-source-of-truth
- Scale to bigger dataset sizes and complexity
- Connect your models into a complete picture
- Display insights to a broad audience
To learn more about how Finicast can help your business, contact us today.
Read the full article HERE.