Financial models are mathematical representations of a company, financial asset(s), or any other investment. Quantitative modeling techniques are applied in Microsoft Excel or other spreadsheets, and incorporate a wide variety of inputs on accounting data such as cash flows, financial data such as stock market performance, and relevant non-financial metrics such as risk factors. By then applying techniques from statistics such as linear regression analysis, skilled modelers can build a simulation that can be used to predict future financial performance.

This type of quantitative modeling is critically important for providing guidance for business decision-making in areas such as investment analysis, corporate finance, and company valuation and forecasting. However, these probabilistic models cannot actually see into the future; a skilled analyst must understand not only the considerable predictive powers of these financial models but also their limitations in order to make proper use of them.

Familiarity with financial models is necessary for many jobs in the business world. Whether you’re an accountant providing inputs for these models, a financial officer presenting them at a board meeting, or a CEO consulting them on business decisions, it’s important to know how these tools work and what they can (and cannot) tell you.

For some business professionals, financial models are even more central to their work. Financial analysts, for example, are employed by banks, investment funds, insurance companies, and other businesses to evaluate financial data, study economic trends, and build and analyze the models used to evaluate investment opportunities.

According to the Bureau of Labor Statistics, financial analysts make a median annual salary of $85,660 per year and typically only have a bachelor’s degree, making this an attractive job to begin your career in the business world.

Absolutely. Coursera has business courses and Specializations on a wide range of topics, including financial modeling. You can take courses focused on areas like financial and quantitative modeling, statistics for financial analysis, and the use of programs like Microsoft Excel and Python in this field.

And, because Coursera offers courses from top-ranked universities from around the world like University of Pennsylvania, Columbia University, Macquarie University, and Hong Kong University of Science & Technology, you won’t have to sacrifice the quality of your education to learn about financial modeling online.