Financial Modelling Fundamentals

By February 9, 2017Blog
Bar Graph - Business Growth

Financial Modelling to Take Your Business to the Next Level

In today’s sporadic economic climate, there has never been a greater need for financial modelling to ensure success and profitability for a business. This is why Advivo is pleased to introduce this type of Financial Modelling Service.

In a nutshell, financial modelling involves building a model of a real-world financial situation. It is a mathematical model designed to represent a simplified version of a business portfolio and using a set of hypotheses about the market to translate them into numerical predictions about future earnings performance.

3-Way Financial Modelling Method

Advivo uses the 3-way modelling method of financial modelling to take your business to the next level and consists of projected Cash Flow, Profit & Loss and Balance Sheet. By implementing the 3-way modelling correctly, all three reports would be in sync, giving you a clear picture of your anticipated profit, the amount that should be in your bank and even your business’ overall net worth.

Financial Modelling Advantages

Other advantages of using financial modelling include:

  1. Full view of the company. integrated financial models provide a real-time, bird’s eye view of the business that is continually updated and provides accurate insights at any time.
  2. Assist with financing loans. Investors and banks are more likely to give you a loan if you have a financial model. This is because you are able to prove that you will not breach any debt covenants.
  3. Minimising financial risk. Financial models capture the future operating, investing and financing activities that determine future profitability, financial position, and risk. This allows owners to ‘try before they buy’ and can prove how a decision can impact an overall business.
  4. Monitors change. Financial models are designed to be flexible and will always produce actual vs forecast results analysis. This data is critical for the key stakeholders to manage the business and calculate ROI.
  5. Time-saving. Developing a financial model is time-consuming in the beginning stage. However, once the hard work is done, the savings in time quickly outstrips the time spent.

With this in mind, the team at Advivo are committed to helping your business thrive with our financial modelling service. We understand that financial modelling can seem complicated, but with our highly skilled accountants and business advisors here to help, we will make the process as easy as possible.

If you have enquiries about this service, please get in touch with us at Advivo on 07 3226 1800 or use our contact form.

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