Reliable Data Sources for Financial Statement Modeling
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| Reliable Data Sources for Financial Statement Modeling |
Internal data sources:
·
Accounting
system: This will vary depending on the accounting software that your company
uses. Some popular accounting software options include QuickBooks, Xero, and
NetSuite.
·
Budgeting
and forecasting system: There are a number of different budgeting and forecasting
software options available. Some popular options include Adaptive Insights,
Anaplan, and Planful.
·
Management
discussion and analysis (MD&A): This section of the company’s annual report
can be found on the company’s website or through the SEC website.
External data sources:
·
Financial
databases:
- o Bloomberg
- o
Capital
IQ
- o
FactSet
- o
Refinitiv
- · Industry
reports:
- o
IBISWorld
- o
Statista
- o
Markets
and Markets
- ·
Analyst
research reports:
- o
Seeking
Alpha
- o
The
Motley Fool
- o
Morningstar
- · Company
websites and filings:
- o
Company
websites
- o
SEC
website
In
addition to the above resources, there are a number of other data sources that
can be used for financial statement modeling. The specific data sources that
you need will depend on the specific model that you are building and the
industry in which your company operates.
It is
important to note that some of the data sources listed above may require a
subscription fee. There are also a number of free data sources available, such
as the SEC website and the company’s website.
Review Internal Sources:
- Accounting
System: The company’s own accounting system,
such as QuickBooks or SAP, provides access to detailed financial data,
including historical transactions.
- Budgeting
and Forecasting System: Internal budgeting and forecasting data
can help project future financials and assess actual performance against
planned figures.
- Management
Discussion and Analysis (MD&A): Company reports, including
MD&A sections, offer valuable insights into management’s perspective
on financial performance and future expectations.
Review External Sources:
- Financial
Databases (e.g., Bloomberg, Capital IQ): These databases offer a
wealth of financial data, including historical financial statements,
market data, and analyst estimates.
- Industry
Reports: Industry-specific reports and
publications provide valuable context for understanding a company’s
financial performance in the broader market.
- Analyst
Research Reports: Analysts often provide in-depth research
reports on specific companies, offering a third-party perspective and
forecasts.
- Company
Websites and Filings: Official company websites and regulatory
filings (e.g., SEC filings in the United States) are direct sources of
information, including annual reports and disclosures.
How to Enhance Your Analysis
- To enhance your financial statement modeling and analysis, follow these best practices:
- Use a Variety of Data Sources: Incorporate data from a mix of internal and external sources to gain a holistic view of the company.
- Cross-Check Data: Cross-reference data from multiple sources to validate accuracy and identify any discrepancies.
- Understand Source Limitations: Be aware of the limitations and potential biases of each data source to make more informed judgments.
- Realistic Assumptions and Forecasts: When projecting future financials, make assumptions grounded in reality and support them with data.
- Sensitivity Analysis: Test different scenarios to understand the impact of various factors on your financial model. This helps in assessing the robustness of your analysis.
Conclusion
In the world of finance, reliable data is the cornerstone of effective financial statement modeling and analysis. By using a variety of internal and external data sources, cross-checking information, and making realistic assumptions, you can enhance the accuracy and credibility of your analysis. This not only leads to more informed decision-making but also provides a competitive edge in the dynamic landscape of finance
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