What is Financial Modeling? Explanation & Setup of a Financial Model

We learn about financial modeling by discussing the uses of financial models & building one from scratch. Downloadable template included.

Communities:

Related Financial Modeling Videos:
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

Strangely, students around the world graduate from universities with finance degrees every year without knowing how to build financial models - the most fundamental part of working in finance.

I created this video to break a financial model down in a simple way so that you will be able to understand and build them yourself.

So, what is financial modeling, and what's the best way to learn it?

Financial modeling is pretty simple. You just need to understand the basic components of a financial model so that you can collect all the information and build one.

The main sections are revenue (sales), direct costs (cost of goods sold), fixed costs (operating expenses), and profit margins. We focus on these four areas as we walk through a step-by-step example of building a real financial model.

SECTIONS:
0:22 what is financial modeling
1:18 what do we use financial models for
2:41 components of a financial model
4:59 how to build a financial model step-by-step
5:47 projecting revenue in an income statement
10:37 projecting cost of goods sold
15:02 projecting operating expenses
17:37 calculating gross profit, operating profit, and net income

I hope that you can now understand financial modeling and how financial models are built. If you have questions - please leave comments below and I'll try to help. Cheers!

#whatisfinancialmodeling #financialmodel #financialmodeling

[eric_andrews]

Questions? Let me know in the comments happy to discuss.

[pimht]

This model literally saved my life. My online course needs models and online instructors don't teach, just grade. I'm essentially paying to teach myself. Took me all week to find this video, but I am GRATEFUL!!!

[joon]

As a non eng speaker i really appreciate your clear pronunciation skills!
I need to explain a model to the professor tomorrow for an exam & you saved me.

[asadyousafzai]

I hope you continue to provide these kind of learning videos. You are a rockstar!!

[mohsinbaig]

I am so glad that I found your channel. So helpful and amazing. Man I really appreciate! ✨♥️

[danielavnieli]

You are now the GOAT for financial modeling. Thanks again!

[muhammadzakiachsan]

Hi Eric, thanks for making this video! It helps me during my preparation for a Job Interview. I learned financial modeling in my under-graduate, but I wasn't ready yet and I didn't learn much about the subject. This video helps me to remember what I was learned back in university and also adding more finance knowledge to me.

Many thanks to you!

[worapitchaj.]

Eric, Thank you very much for sharing! It's such a great video to start making financial modeling. Simple but informative. Awesome!

[brigetfields]

Great content- an amazing refresher since it's been a long time since I calculated these financials

[azhard]

Appreciate how you are giving away all this information for free ❤️. All your videos are very informative. Keep up the good work please !!

[michellesinyinliew]

Thank you eric, you are the best. Thank u thank u.

[StayPolishThinkEnglish]

Eric, this is extremely useful. You make people walk through it smoothly. I've been looking for something like this. I started from the advanced ones and I was struggling with it (as you said so). Now it's crystal clear. Thank you!

[lavenderl]

Amazing clarity. Thank you for sharing the Excel file for free!!! Subscribed!

[sunriseeternity]

Impressive. Very consise. I feel smarter after watching #excel #financialmodel #profit #enjoylife

[ElzbietaOkrasa]

Wow! This is do well explained!thank you!!

[alirazasyed]

Thanks for a great video Eric. It was very helpful!

[nickleshmaani]

Hi Eric, Thanks for making this video, it's very useful.

[namanpant]

Thank you eric..this help me a alot. Keep it up..👍

[victorynagbi]

Thank you so much, I learnt something new 🤗

[niiatgroup]

Wow thanks Sir, great explenation. very helpfull