CFO Competency #3 Build Financial Models
The Financial Planning & Analysis competency contains the following five skills:
Today's Newsletter will focus on Skill #2: Build Financial Models?
A well-built financial model is a powerful tool for CFOs, offering insights into a company’s past performance and helping forecast its future. It supports key decisions in areas like pricing, investments, and capital structure, making it invaluable to shareholders, leadership teams, and potential investors.
Why Financial Models Matter:
Key Elements of a Strong Financial Model:
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While financial models are valuable, they have limitations. They can be rigid and may not capture every risk, so it's crucial to ensure inputs are accurate and reflect real-world data. Remember, models are just one part of the decision-making process—use them carefully and consider other factors for balanced decisions.
In Episode 148 of the Grow CFO Show, titled "How to Develop Your FP&A Skills," Catherine Marks shares valuable insights on enhancing financial planning and analysis (FP&A) skills. She emphasizes the importance of peer group discussions, the differentiation between leading and lagging indicators, and the practical application of tools that participants can use immediately in their roles. Catherine also discusses the benefits of competency frameworks for personal development and the tailored training options available for organizations.
To dive deeper into this discussion and gain actionable strategies for advancing your FP&A expertise, watch the full video linked here:
For CFOs, financial models offer clarity on financial performance, help forecast future outcomes, and track key metrics. This supports strategic planning, investment decisions, and risk management, keeping businesses financially stable and prepared for challenges. Enhance your leadership skills at our upcoming Future CFO preview event:https://future-cfo-program-preview-events.heysummit.com/ .
Directeur Financier
1 个月Great share, thx
?? Senior Finance Executive | CFO | CPA ?? International Experience ? Revenue & EBIDTA Growth ? Fund Raising ? Big Four Experience ?? Innovative, Solution-Focused Strategist, Finance Leader, And Business Partner
1 个月Great insights, Dan Wells. Building financial models is indeed a critical skill for CFOs, not just for understanding past performance but also for forecasting and making strategic decisions. I appreciate the emphasis on the importance of clearly defined assumptions, which is something I’ve found vital in aligning stakeholders. Thanks for sharing!
Researching wisdom...beyond intelligence
1 个月Excellent article on the importance of financial modeling for CFOs! It's great to see how this skill contributes to being future-ready. Building robust financial models not only helps in evaluating past performance but also in predicting future outcomes and guiding strategic decisions. This forward-looking approach is crucial in today's dynamic business environment. The emphasis on using models for informed decision-making in areas like pricing, investments, and capital allocation is particularly valuable. It's this kind of strategic foresight that allows CFOs to prepare their organizations for future challenges and opportunities. Thanks for sharing these insights on staying ahead in finance! #FinancialModeling #FutureReady #StrategicCFO