Morne Patterson - Financial Model Techniques for Corporate Decision-Making

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Morne Pa erson - Financial Model Techniques for Corporate Decision-Making

In the world of corporate finance, making informed decisions is a cri cal aspect that can significantly impact the success and growth of a company. Financial modelling serves as a powerful tool in this area, offering various techniques to analyse and forecast future scenarios and help iden fy value. These techniques can play a big part in aiding corporate decision-making by providing a comprehensive understanding of poten al outcomes. Let’s unpack some popular financial modelling approaches u lised in corporate finance for effec ve decision-making.

DCF Analysis (Discounted Cash Flow) DCF analysis is possibly the most widely used financial model, es ma ng the value of a company based on its projected future cash flows. This model is endorsed by revered Investment guru, Warren Buffet. By discoun ng these cash flows to present value, decision-makers gain insight into whether an investment is financially viable or if the current valua on aligns with market prices. This technique helps in evalua ng long-term investment prospects and forms the basis for strategic decisionmaking.

Scenario Analysis In a world of uncertain es, scenario analysis assists in examining various possible outcomes by altering key variables. By crea ng mul ple scenarios based on op mis c, pessimis c, and realis c assump ons, decision-makers can be er understand poten al risks and opportuni es. This technique empowers you to prepare strategies that are robust enough to withstand different market condi ons.


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