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What are some examples of financial planning models? How are these models used to make financial decisions? Why is it important to use these models? What are the strengths and weaknesses of financial planning models? (at least 200 word). Thanks.

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What are some examples of financial planning models? How are these models used to make financial decisions?

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Some of the examples of financial planning models include deterministic models, simulation based financial models and other specialized financial models. "In a deterministic model, a financial analyst enters a set of input data into a spreadsheet, programs the spreadsheet to perform a series of mathematical calculations, and displays an output result.

Most deterministic financial models are built by performing an analysis on historical data to derive the relationship between key forecast variables. In a corporate context, historical accounting relationships are often used to forecast key revenue and cost variables.

While a deterministic financial model is normally ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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