What is Financial Modeling? Explanation & Setup of a Financial Model

[@eric_andrews]

Questions? Let me know in the comments happy to discuss. 🚀 Also, if you want to learn how to systematically scale your startup without ending up as one of the 90% of startups that fail, check out my free training webinar ⇒ www.ericandrewsstartups.com/financeforstartups

[@pappalardox]

Great video, thoroughly explained and with some helpful hints for folks that aren't as familiar with Excel. Only thought/question is this: Does a valid (even basic) financial model not make some assumptions regarding an increase in COGS over time? Predicting that those values would hold steady over that length of time seems like a pit fall for this model, even based on hypothetical values.

[@pimht]

This model literally saved my life. My online course needs models and online instructors don't teach, just grade. I'm essentially paying to teach myself. Took me all week to find this video, but I am GRATEFUL!!!

[@eric_andrews]

You are welcome and I'm so happy it was exactly what you were looking for !!

[@joon3638]

As a non eng speaker i really appreciate your clear pronunciation skills! I need to explain a model to the professor tomorrow for an exam & you saved me.

[@eric_andrews]

Happy to help!

[@islammdamsi31]

Simply great!!! your way of explaining model is really helpful, easy to understand, specially appreciate as you clarify each term (Indirect, Direct, operating, average acquisition cost etc) while explaining your model, that'd help non finance people as well. Thanks Bro Eric.

[@danielavnieli685]

You are now the GOAT for financial modeling. Thanks again!

[@eric_andrews]

Cheers Daniel 🙏🙏🙏

[@muhammadzakiachsan4750]

Hi Eric, thanks for making this video! It helps me during my preparation for a Job Interview. I learned financial modeling in my under-graduate, but I wasn't ready yet and I didn't learn much about the subject. This video helps me to remember what I was learned back in university and also adding more finance knowledge to me. Many thanks to you!

[@eric_andrews]

Really glad it is helping you in your career Muhammad and getting you started financial modeling. Best of luck to you!

[@alpaytok]

Teşekkürler.

[@eric_andrews]

You are very welcome!

[@azhard7399]

Appreciate how you are giving away all this information for free ❤️. All your videos are very informative. Keep up the good work please !!

[@eric_andrews]

It's my pleasure Azhar! Lots more coming, thanks for the support 😀

[@asadyousafzai2904]

I hope you continue to provide these kind of learning videos. You are a rockstar!!

[@eric_andrews]

Thank you, I will Asad!!!! Lots more to come this year.

[@sunriseeternity300]

Impressive. Very consise. I feel smarter after watching #excel #financialmodel #profit #enjoylife

[@brigetfields4490]

Great content- an amazing refresher since it's been a long time since I calculated these financials

[@eric_andrews]

Glad it was helpful!

[@StayPolishThinkEnglish]

Eric, this is extremely useful. You make people walk through it smoothly. I've been looking for something like this. I started from the advanced ones and I was struggling with it (as you said so). Now it's crystal clear. Thank you!

[@eric_andrews]

Glad to hear it! Thanks for the comment!!

[@rickylin5561]

Financial Modeling is a broad/general concept. It covers from corporate finance, quant model and statistical model (linearity). Really depends on which you need in specific purpose. I think the one you introduced in the video is more like a Corp Finance (FP&A) focused financial model. Correct me If Im wrong, thanks!

[@eric_andrews]

For sure! Any financial thing could be modeled, but this video is for the purposes of projecting financials to run a company (corp finance as you said)

[@nickleshmaani2508]

Hi Eric, Thanks for making this video, it's very useful.

[@eric_andrews]

My pleasure

[@panagiotismytilineos5964]

Hey Eric! Great work! What if you have more than one product? Sales revenue and cogs has to change because not all the predicted orders are from one product. What do you suggest? Do you have any video with that model? Thank you!

[@mibusharah]

Thanks a lot I had no idea about the financial model.

[@eric_andrews]

my pleasure!

[@mohsinbaig2195]

I am so glad that I found your channel. So helpful and amazing. Man I really appreciate! ✨♥️

[@alirazasyed100]

Thanks for a great video Eric. It was very helpful!

[@eric_andrews]

Glad it was helpful!

[@worapitchaj.1061]

Eric, Thank you very much for sharing! It's such a great video to start making financial modeling. Simple but informative. Awesome!

[@eric_andrews]

Glad it was helpful!

[@bettyomollo7758]

Can you explain one for an NGO

[@lavenderl9731]

Amazing clarity. Thank you for sharing the Excel file for free!!! Subscribed!

[@eric_andrews]

Happy it was helpful Lavender, appreciate the subscribe!!

[@ngamin5234]

excellent lectured 👍

[@eric_andrews]

Thanks a lot!

[@ElzbietaOkrasa]

Wow! This is do well explained!thank you!!

[@ifeoluwaademeso]

Thank you

[@PatriceMorris.]

Eric, so what would be considered in the present? Accounting is past and Financial model is future? What about the here and now?

[@eric_andrews]

Generally that would be a lot of data around sales and marketing, and also to be approving or considering different investments, etc, but always keeping in mind your financial plan for the month to understand where you are at / if you want to change your plan. Present finance stuff is more tracking your performance and knowing where you are trending relative to plans. Hope that is helpful

[@maheshramachandran5922]

Eric good, but how to modify this model for a manufacturing business unit.

[@KevinDutton-wo5jp]

Такие близкие игры самые интересные) кайфово что тебе пришли такие заносы сегодня)

[@virtuousmama6089]

Dude you rock…..you dropped so much value

[@eric_andrews]

Haha thanks, glad it was helpful!

[@ManojKumar-ic1iy]

Thankyou for sharing information

[@eric_andrews]

you are very welcome

[@gcinapersevervance1504]

Wow! Amazing!

[@ibrarahmad795]

If possible could you please share its use able format please....as the one which was in link, not able to use that format...please

[@MrCelcifer]

Wow Amazing explanation. Thankyou Sir

[@aswinxavierab3223]

Really helpful video

[@victorynagbi7300]

Thank you so much, I learnt something new 🤗

[@eric_andrews]

You are very welcome 😁

[@asmaaljemeli6751]

OMG thank you so much! this is so helpful!!

[@eric_andrews]

Glad to hear it!

[@hariadiksa531]

Thankful... Give me back lesson... 👍

[@eric_andrews]

youre welcome!

[@muhammadumad7687]

Really informative..ERIC

[@sandipchavan3956]

Very good and easy explained...thanks

[@eric_andrews]

My pleasure Sandip! Cheers

[@TasneemJahan-ow7xw]

Love your content! Thanks .

[@eric_andrews]

Thanks for watching!

[@shrikantbadge3978]

Nicely explained thanks

[@eric_andrews]

Cheers

[@bettyomollo7758]

Awesome...

[@michellesinyinliew8062]

Thank you eric, you are the best. Thank u thank u.

[@14jabin]

Thank you!

[@michellesinyinliew8062]

May i know do you have what if analysis video?

[@wishudeath4143]

Thanks Eric Sir

[@josephkiema4767]

It is great . want to learn more.

[@gazals8039]

Please make whole course for financial modeling

[@eric_andrews]

I am going to at some point Gazal! Thanks for the suggestion 👌

[@gazals8039]

Please whole course about financial modeling

[@eric_andrews]

Don't worry, it is coming!

[@namanpant3895]

Thank you eric..this help me a alot. Keep it up..👍

[@eric_andrews]

Cheers Naman happy it was helpful 👍

[@niiatgroup9451]

Wow thanks Sir, great explenation. very helpfull

[@eric_andrews]

very welcome!

[@tarekalsherif57]

Thank you Eric

[@eric_andrews]

You are very welcome Tarek!

[@enfinite05]

Stupid question.... is only excel used or can you use google sheets? I love google sheets over excel.

[@eric_andrews]

Google sheets is totally fine as well

[@oussamaoussama6364]

Thanks a lot, great tutorial

[@eric_andrews]

Cheers!

[@sonerguney3225]

Well done. Thanks for your efforts.

[@eric_andrews]

My pleasure, glad it was helpful Soner 👍

[@jitenanand4899]

double entry book keeping system is just the old school of SQL language we use today.

[@michellesinyinliew8062]

You are the best 🤩🤩🤩🤩

[@eric_andrews]

Glad it was helpful Michelle!!

[@NormalDudeInBound]

Your KZbin channel is great. Really helps me with my business. Who needs business school, when you have KZbin? :)

[@nayanakumarapanditharathna9167]

100 present thank you & Tripalgem Bless you!!!

[@maggienguyen958]

Love your video. Thank you!

[@eric_andrews]

My pleasure Maggie, glad it was helpful!

[@ysally3214]

Hi Eric, may I know how to predict the marketing costs and how to predict the return rate ? thanks a lot

[@eric_andrews]

Unless the company has no history, you can just look back at the marketing costs in the past as well as the new customers and figure out what the historical numbers have been, and use them as assumptions going forward. Return rate would be the same. If you do not have any historical data, you will need to make assumptions. Cheers

[@Asucion731]

Thanks for sharing, very helpful :)

[@eric_andrews]

My pleasure, glad it was helpful Jia

[@godislove8831]

Hi Eric , i am going to interview for Administrator finance i would like you to help me with questions and duties for this position.

[@BM_AM_MFB]

Is the term "Predictions" mean same as "Forecasting" ? That's what I've been hearing all my life, and when I hear someone say "Predict the future" , I just wonder how different is it from "Forecasting" ?

[@eric_andrews]

predictions, forecast, budget, and plan all mean the same thing in the context of financial modeling 😅

[@markgreen2170]

Nice, thanks!

[@priyankakaran6932]

How can I learn full course of financial modelling from Eric? And what is the cost? It is urgent please do reply

[@eric_andrews]

Hi Priyanka - I'm going to be releasing a comprehensive course in November, but for now I just have the youtube. I recommend you watch my 3 statement financial model video next, as that is more than most people learn during their 4 year degree: kzbin.info/www/bejne/rp27dY2vj56UsM0

[@priyankakaran6932]

@@eric_andrews okay thank you so much sir

[@isaacadelugba7444]

Gather here all those who are going for interview on financial modeling

[@timestampingarmy]

0:32 finance and accounting

[@enquiryenquiry9069]

Don't understand why your Financial Model Example included talking for several years ie. 4 years Can Financial Model only be 1 year?

[@ThomasWoldeyesus]

you are amezing i am from ethiopia

[@eric_andrews]

👋 cheers and hope you learn a ton

[@ntcuong01ct1]

Dear Friends, I have 1 question regarding Financial Modeling: 1/ Please tell me the difference between Scenario analysis, sensitivity analysis, stress test?, and the intended use of each?. Thank you.

[@hadilee685]

Thanks, Eric. You have been such a great help. I am trying to set up a light manufacturing financial model. A combination of three statements, DCF, FCF, cap model, sensitivity analysis, dep schedule, LTV/CAC as well.

[@eric_andrews]

It's my pleasure to help. Sounds like you are on the right track with your model! Good luck Hadi

[@JayanVarghese]

Could you build one for a services business in the future? ex: website design company

[@eric_andrews]

Yes it's on my list

[@kimoso8154]

Hello, am a student building a farming system profit model. Can I have your guidance kindly

[@SeMTeXSpale]

lets say in investment banking you are required to make a financial model how would you get the info for the business?

[@eric_andrews]

Is it a public or private company ?

[@SeMTeXSpale]

@@eric_andrews lets say it was jp morgan

[@eric_andrews]

@@SeMTeXSpale I'm talking about the company that you're modeling not the investment Bank 😅

[@SakugaBR]

Should build a business model first, makes identifying this all easy

[@abelsimonyan4822]

God bless your parents!

[@enquiryenquiry9069]

In the video, you only teach us about Financing Model for Income Statement. Is Financing Model only shown income statement? Is Financing Model no need to shown balance sheet? Why?

[@Antonioalvarez-nm5mz]

Have you thought about setting up a Discord? Would be interesting to interact with other Startup Founders/Financial Analysts about their modeling approach and information sources. Great videos, thanks so much!

[@eric_andrews]

It's actually a pretty cool idea. Do you think there would be much interest? I'm open to it

[@Antonioalvarez-nm5mz]

@@eric_andrews Hard to tell how much engagement would be in the begininig. I think it would be a way to grow the community around your channel. It could have discord channels for you to post some useful resources, suggestions for videos, general questions and a place where your viewers can share what are they doing or what their goals are. For example, a topic like how CAC is calculated across different industries or if anyone had experience of how it evolved through time. Just make sure you moderate it so no promoting is allowed. Anyway, you could ask some viewers in your live stream.

[@eric_andrews]

​@@Antonioalvarez-nm5mz honestly it's an amazing idea. I really appreciate you sharing it. I've been trying to figure out a place where we can all connect, because I imagine we all have similar careers and questions. Sounds like a discord would be a great solution. I'll ask about it in the livestream!!

[@eric_andrews]

@@Antonioalvarez-nm5mz Hey antonio - I'm setting up a discord, but I don't have a ton of experience. Do you think you could take a quick look and let me know if you think it's ok? It would be a massive help. If you're open to it, could you shoot me an email at ?[e-mail]

[@peterjohansson739]

When will you create a course in financial modeling?

[@eric_andrews]

Hey Peter - sometime before the end of the year I think 😃

[@mustafamohammed2700]

How can I get the template of the financial modeling?

[@eric_andrews]

It's right there in the description for free 👍

[@harshavardhan5728]

Hi Eric, I have a assignment with me, that needed for my studies - if you can help me out working these up it would be really helpful for my studies. If you are okay, let me know through what means can I share to you

[@mohamedreda5738]

Hey Eric, I'm trying to Subscribe to your Exchange to download the Workbook, but I don't know how haha, any help, please?

[@eric_andrews]

No problem. Click the link in the description and go to the download page. Then enter your email and click subscribe. After you do that, you will see a link to download the file!

[@mohamedreda5738]

@@eric_andrews I can't find the option (Place) to add my Email, also the Subscribe button is not there.

[@eric_andrews]

@@mohamedreda5738 first link in the video description bit.ly/finmodeling_mlchmp

[@miamiwalking]

Cool videos. Would it be possible to record in 1080p ?

[@enquiryenquiry9069]

Are all Financial Model Figuers predicted only? We don't know the acutal result for sales quantities in future years, don't know the actual payroll figures in futures If the figures are predicted or projected, the final result may be only predicted. I don’t think that predicted financial model is meaningful & useful for board of directors or boss.

[@SohailAhmed-sy3jn]

Study in 2024

[@age_of_reason]

Starts by saying finance is about future forecasting and then says the most common financial model is the Income Statement which is a backwards looking (Accounting) statement. You sir don't know what you're talking about.