Take a Deeper Look at Your Business Through Financial Modeling
Often business owners are making financial decisions based on historical financial data presented in a traditional financial statement format. Although this traditional method is effective and valuable, there is a more powerful way to get your arms around your company’s overall position through financial modeling.
Financial modeling takes the same historical financial data used in traditional financial statements and expands upon the normal financial statement. A properly prepared financial model will give you a detailed report that places your company’s performance up against others in your industry and of the same size. This model will also highlight areas of your business that are performing poorly and will suggest actions to take to alter these undesirable results.
When we prepare financial models for our clients, we produce detailed reports with graphs and other valuable information. In greater detail the financial model includes the following:
- A robust financial report that provides insight in key areas of the business. Areas such as liquidity, Profits and Profit Margin, Sales, Borrowing and Assets.
- Recommendations on how to improve these key areas.
- Benchmark data that measures the company against other company’s financial well being of similar size and industry.
- Industry Scorecard that displays the company’s key financial indicators (financial ratios) and how they measure up to the company’s industry.
- Three to five year projections that are based on historical data and three to five year projections based on new assumptions.
- A valuation of the business based on the “discounted cash flow method”.
With a minimal investment, a well prepared financial model can impact your business immediately and well into the future making this an extremely valuable exercise for your business.
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