In this modern-day and age, almost any information is already accessible and available online. For this reason, more and more people are relying on the internet to learn about the things that they want to familiarise themselves with, including financial modelling. But can you learn financial modelling on your own?
The short answer to this is YES.
For sure you can learn financial modelling on your own. However, this may require a bit more legwork.
In trying to learn financial modelling on your own, you need to first familiarise yourself with some spreadsheet basics that will help you significantly. The seasoned experts behind a reputable financial modelling company suggest that you try to use as many keyboard shortcuts as possible, keeping your formulas and calculations simple. In terms of the latter, what you can do is break them down into smaller steps. You can also use a grouping function to organise sections of the financial model or use a combination of date functions to make the dates dynamic. These are only some of the basics that you need to master.
Best Practices in Financial Modelling
Apart from learning spreadsheet basics, you should also master the best practices in financial modelling if you want to be successful in learning it on your own. For instance, you can use colour coding to distinguish between the input and your formulas. You can also build a three-statement model in a single worksheet rather than separate the statements into different sheets. What you should clearly separate though, is the assumptions or drivers from the rest of the model. There are various other best practices that you need to master in learning financial modelling on your own but you will most likely be aware of them as you go along your learning journey.
Another thing that you need to look into in learning financial modelling is how to build a forecast. You may find that there are various approaches to forecasting such as a top-down analysis, as well as a bottom-up analysis. You can even build a forecast using a regression analysis approach or a year-over-year growth rate. The right type of approach generally depends on how you are trying to present the data you are given with.
Finally, you should also be able to link three financial statements as part of financial modelling. In this case, you can begin by calculating the revenue based on the forecasting approach that you used. From there, you can already begin creating supporting schedules, round up the income statement, and also build the cash flow statement. Rest assured that you will find various video tutorials on how you should go about these steps. Just make sure that you are watching ones coming from the most reliable sources.
With the advancements in modern technology, almost any information you need is already available and accessible online, even financial modelling courses. For this reason, you can definitely learn financial modelling on your own. Just keep in mind that doing it yourself will entail the need for you to perform more legwork, as well as exceptional discipline.