To predict future financial performance

To analyze historical financial data

To create a budget for a company

To manage risk

Income statement model

Balance sheet model

Cash flow statement model

Monte Carlo simulation model

Deterministic models use historical data, while stochastic models use future data.

Deterministic models are more accurate than stochastic models.

Deterministic models are simpler than stochastic models.

Stochastic models are used to assess risk, while deterministic models are not.

Time series analysis

Regression analysis

Causal modeling

Machine learning

A point forecast is a single value, while an interval forecast is a range of values.

A point forecast is more accurate than an interval forecast.

An interval forecast is more useful than a point forecast.

A point forecast is used to make decisions, while an interval forecast is used to assess risk.

To identify the variables that have the greatest impact on a financial model

To assess the risk of a financial model

To validate a financial model

To improve the accuracy of a financial model

One-way sensitivity analysis

Two-way sensitivity analysis

Three-way sensitivity analysis

Tornado diagram

Scenario analysis is used to assess the impact of multiple possible future events, while stress testing is used to assess the impact of a single extreme event.

Scenario analysis is more accurate than stress testing.

Stress testing is more useful than scenario analysis.

Scenario analysis is used to make decisions, while stress testing is used to assess risk.

To provide information for decision-making

To assess the risk of a financial model

To validate a financial model

To improve the accuracy of a financial model

Short-term forecast

Long-term forecast

Rolling forecast

Budget

A top-down forecast is based on macroeconomic data, while a bottom-up forecast is based on microeconomic data.

A top-down forecast is more accurate than a bottom-up forecast.

A bottom-up forecast is more useful than a top-down forecast.

A top-down forecast is used to make decisions, while a bottom-up forecast is used to assess risk.

To ensure that the model is accurate

To assess the risk of the model

To improve the accuracy of the model

To provide information for decision-making

Historical data analysis

Sensitivity analysis

Scenario analysis

Backtesting

A financial model audit is more comprehensive than a financial model review.

A financial model audit is more expensive than a financial model review.

A financial model audit is more time-consuming than a financial model review.

All of the above.

To ensure that the model is accurate

To assess the risk of the model

To improve the accuracy of the model

To provide information for decision-making