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a financial model in projecting future cash flows

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For what reasons would a firm use a financial model in projecting future cash flows from an investment, and what are the primary factors to consider when making the cash flow estimates?

Book: Corporate Finance: The Core, 2nd ed.

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The response addresses the queries posted in 562 words with references.

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The response addresses the queries posted in 562 words with references.
The main task of a financial analyst is to prepare a complete financial report on the investment done by the firm. Various financial models can help in depicting the future cash flow to analyze the future surplus and deficit finances. This paper includes the reasons of using financial model to project future cash flow and other primary factors that can be considered in making cash flow estimates.

A financial model is a process by which, a firm can construct a financial representation of an investment. It is used to present all aspects of the firm related to security and profitability. Financial model can be characterized on the basis of calculations, recommendations and information available by the firm. Financial model also helps the user in analyzing possible action and alternatives of investment. To project future cash flow from an investment is the main function of ...

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  • MBA (IP), International Center for Internationa Business
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