From the course: Corporate Finance: Robust Financial Modeling
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Understanding data
From the course: Corporate Finance: Robust Financial Modeling
Understanding data
- Pretty much every financial model requires some sort of baseline information to get things started. I'm talking here about things like historical expenditure. Say, for example, that we want to produce a life cycle cost model for an existing customer relationship management system, or just CRM. A life cycle costing model is essentially an estimate of an investment or asset's total cost over its projected useful life. That is the period of time we expect the asset to be used. A model like this usually requires forecasts to be prepared for many years into the future. By definition, a forecast is a best guess of what might happen in the future based on prior knowledge. Simply put, to answer the question, how much do we think the CRM will cost us over the next seven years? A good start might be to understand, how much has it cost us over the past seven years? And this type of information should come from an authoritative…
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