Financial model

A simplified representation of a financial situation, using a selected set of assumptions and relationships.

Financial models are widely used as tools for valuation and to support financial decisions.

In simple terms, a model:

• Presents a financial calculation (or calculations)
• In a way that enables the user to understand it and to challenge it, especially about the assumptions.

See also

• Ceteris paribus
• Deterministic
• Financial modelling
• Model
• Rounding
• Simulation
• Stochastic