What Is Financial Modeling and Valuation? A Question-Driven Overview

Financial modeling and valuation are essential for informed corporate decision-making. Analysts use assumptions, projections, and scenarios to forecast cash flows and estimate enterprise value. Key factors such as discount rates, growth rates, and capital structure shape valuation accuracy. Sensitivity analysis highlights which variables most impact results, while scenario planning and risk assessment improve strategic clarity. Models differ across startups, mature firms, and distressed entities, adapting to unique financial dynamics. Through benchmarking and data-driven evaluation, financial modeling provides a structured approach to guide investments, budgeting, and long-term business strategy with precision and insight.