What is Financial Modeling?

Financial modeling is the process of creating a summary of a company’s expenses and earnings in the form of a spreadsheet that can be used to calculate the impact of a future event or decision.

A financial model has many uses for company executives. Financial analysts often use it to analyze and anticipate how a company’s stock performance might be affected by future events or executive decisions.


  • Financial modeling is a numerical representation of some or all aspects of a company’s operations.
  • Financial models are used to estimate the valuation of a business or to compare companies to their industry competitors.
  • Various models exist that may produce different results. A model is only as good as the inputs and assumptions that go into it.