http://www.financialmodelingguide.com/modeling-discipline/common-mistakes/ Free online resource for financial modeling advice, tips and tricks Wed, 04 May 2011 07:24:19 +0000 hourly 1 http://wordpress.org/?v=3.1.2 http://www.financialmodelingguide.com/modeling-discipline/common-mistakes/comment-page-1/#comment-1860 Siva Mon, 13 Apr 2009 02:06:30 +0000 http://www.financialmodelingguide.com/financial-modeling-tips/tips/common-mistakes-in-financial-modeling/#comment-1860 Good list of common mistakes. I also liked the third point in the golden rules. The entire financial modeling exercise would turn futile if the projections are not aligned to reality. It is necessary to be modest with the projections even if you are aggressive in your business. There are so many extraneous factors that pressure the business and so it is better to accept a surprise than a shock. I think one more golden rule is to "be flexible". The environment in which the business operates or is expected to operate sometimes changes so dramatically and so fast that all the numbers projected may be thrown out of the realm of reality very easily. This is why it is necessary to be flexible with the assumptions. When the reality changes, the model should take that into account and change the numbers. For example for seasonal businesses we can make three different sets of projections based on optimistic, pessimistic and realistic scenario. Whichever materializes, the user has to select it to see the numbers change instantaneously. For building <a>Financial Models</a> visit our site <a>financialmodel.net</a> Good list of common mistakes. I also liked the third point in the golden rules. The entire financial modeling exercise would turn futile if the projections are not aligned to reality. It is necessary to be modest with the projections even if you are aggressive in your business. There are so many extraneous factors that pressure the business and so it is better to accept a surprise than a shock. I think one more golden rule is to “be flexible”. The environment in which the business operates or is expected to operate sometimes changes so dramatically and so fast that all the numbers projected may be thrown out of the realm of reality very easily. This is why it is necessary to be flexible with the assumptions. When the reality changes, the model should take that into account and change the numbers. For example for seasonal businesses we can make three different sets of projections based on optimistic, pessimistic and realistic scenario. Whichever materializes, the user has to select it to see the numbers change instantaneously. For building Financial Models visit our site financialmodel.net

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