{"id":10426,"date":"2025-09-11T11:04:30","date_gmt":"2025-09-11T05:34:30","guid":{"rendered":"https:\/\/www.thewallstreetschool.com\/blog\/?p=5198"},"modified":"2025-09-11T11:04:30","modified_gmt":"2025-09-11T05:34:30","slug":"financial-models-2025-guide","status":"publish","type":"post","link":"https:\/\/www.thewallstreetschool.com\/stg-new\/financial-models-2025-guide\/","title":{"rendered":"Types of Financial Models in 2025: A Complete Guide"},"content":{"rendered":"\n<p><strong>\u201cNumbers don\u2019t lie, but without the right model, they don\u2019t tell the full story either.\u201d<\/strong><\/p>\n\n\n\n<p>In India today, money stories are everywhere\u2014startups getting crores from investors, big infra projects changing cities, and IPOs becoming as common as cricket news. Behind all this action is one key tool: financial models. They\u2019re not just Excel sheets anymore\u2014they\u2019re survival tools.<\/p>\n\n\n\n<p>But many finance students and freshers still ask: <em>\u201cWhat types of financial models really matter in 2025?\u201d<\/em><\/p>\n\n\n\n<p>This guide makes it super simple. You\u2019ll learn both the classic global models and the desi ones that Indian professionals actually use to raise money, win investor trust, and grow fast.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Financial Models Matter in India Today<\/strong><\/h2>\n\n\n\n<p>Think of a financial model as a story told with numbers. It\u2019s what convinces investors to back a startup, helps banks decide on loans, and guides companies through big moves like expansions or mergers.<\/p>\n\n\n\n<p>By 2025, in India, financial models are everywhere, whether it\u2019s funding rounds, renewable energy projects, IPO valuations, or even routine tasks like budgeting and GST-linked working capital. Without them, no major financial decision takes shape.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Classic Global Models You Must Know<\/strong><\/h2>\n\n\n\n<p>Even in India, global financial models set the foundation. Here\u2019s a simple take on the most important ones:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Three-Statement Model<\/strong> \u2013 Links income statement, balance sheet, and cash flow into one big picture. <em>Example: Forecasting Infosys\u2019 profits and cash flow.<\/em><\/li>\n\n\n\n<li><strong>Discounted Cash Flow (DCF)<\/strong> \u2013 Predicts future cash flows and brings them to today\u2019s value. <em>Example: Paytm\u2019s pre-IPO valuation.<\/em><\/li>\n\n\n\n<li><strong>M&amp;A (Merger) Model<\/strong> \u2013 Checks how two companies fit together financially. <em>Example: HDFC\u2013HDFC Bank merger.<\/em><br><\/li>\n\n\n\n<li><strong>IPO Model<\/strong> \u2013 Calculates share price before going public. <em>Example: Zomato IPO<\/em>.<br><\/li>\n\n\n\n<li><strong>Leveraged Buyout (LBO)<\/strong> \u2013 Uses borrowed money to buy companies for higher returns. Example: Debt-heavy NBFC acquisitions.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Sum of the Parts (SOTP)<\/strong> \u2013 Values each business unit separately, then adds them up. <em>Example: Tata Group\u2019s steel + auto + telecom divisions<\/em>.<br><\/li>\n<\/ul>\n\n\n\n<p>These are the <strong>bread-and-butter answers<\/strong> to <em>what types of financial models are there<\/em>\u2014the ones you\u2019ll find across the world.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Financial Models in India You\u2019ll Actually Use<\/strong><\/h2>\n\n\n\n<p>Now let\u2019s get local\u2014these are the models Indian professionals work on almost every single day:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Working Capital Model<\/strong> \u2013 Keeps MSMEs\u2019 cash flow in check by tracking inventory, receivables, and payables.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><em>Example: <\/em><a href=\"https:\/\/www.dnb.co.in\/FILE\/REPORT\/2024\/MSME-Sampark-Bi-Annual-report-on-latest-in-MSME-lending-Ecosystem.pdf?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\"><em>U GRO Capital uses this to forecast short-term funding needs for MSMEs, like how much cash they need for inventory, receivables, etc.<\/em><br><\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Project Finance Model<\/strong> \u2013 A must for big infra and renewable projects.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><em>Example: <\/em><a href=\"https:\/\/www.mercomindia.com\/agel-refinances-1-06-billion-loan-for-wind-solar-projects-in-rajasthan?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\"><em>Adani Green secured <\/em><strong><em>USD 1.06 billion<\/em><\/strong><em> to refinance its wind-solar project in Rajasthan\u2014a real-life example of project finance in action.<\/em><br><\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>SaaS \/ Startup Cohort Model<\/strong> \u2013 Popular with India\u2019s booming startup scene. Tracks customer churn, acquisition costs, and recurring revenue.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/razorpay.com\/blog\/business-banking\/financial-modeling-for-startups\/?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\">Razorpay powers this behind the scenes with data tools for tracking customer churn, recurring revenue, and cost per acquisition\u2014vital for scaling.<br><\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Retail Unit Economics Model<\/strong> \u2013 Used in retail and e-commerce to plan pricing and expansion.&nbsp; Helps decide store rollout or SKU pricing.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><em>Example: Nykaa\u2019s store rollout.<\/em><em><br><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Bank\/NBFC Credit Model<\/strong> \u2013 Measure loan risk, repayment ability, and regulatory compliance.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/www.adanigreenenergy.com\/newsroom\/media-releases\/adani-green-secures-usd-400-million-from--international-banks-for-750-mw-power-projects?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\">Lendingkart and similar companies use analytical models to rate MSME loan applicants, guarding against default while serving clients.<\/a><br><\/p>\n\n\n\n<p>These aren\u2019t just fancy Excel sheets\u2014they\u2019re lifelines for Indian businesses. Without them, you can\u2019t raise funds, manage risk, or convince investors.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/thewallstreetschool.com\/stg-new\/wp-content\/uploads\/2025\/09\/NEW-blog-image-size-1-2-1024x579.png\" alt=\"types of financial models\nfinancial modeling\" class=\"wp-image-5200\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Quick Comparison at a Glance<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Model<\/strong><\/td><td><strong>Best Use Case<\/strong><\/td><td><strong>Indian Example<\/strong><\/td><\/tr><tr><td><strong>Three-Statement<\/strong><\/td><td>Routine planning<\/td><td>Infosys forecasts<\/td><\/tr><tr><td><strong>DCF<\/strong><\/td><td>Equity valuation<\/td><td>Delhivery IPO<\/td><\/tr><tr><td><strong>M&amp;A<\/strong><\/td><td>Mergers\/acquisitions<\/td><td>HDFC\u2013HDFC Bank<\/td><\/tr><tr><td><strong>IPO<\/strong><\/td><td>Public listings<\/td><td>Zomato IPO<\/td><\/tr><tr><td><strong>LBO<\/strong><\/td><td>Debt acquisitions<\/td><td>Shriram Finance<\/td><\/tr><tr><td><strong>SOTP<\/strong><\/td><td>Conglomerates<\/td><td>Tata breakup<\/td><\/tr><tr><td><strong>Working Capital<\/strong><\/td><td>MSME\/GST cash cycle<\/td><td>U GRO Capital<\/td><\/tr><tr><td><strong>Project Finance<\/strong><\/td><td>Infra\/renewables<\/td><td>Adani Green<\/td><\/tr><tr><td><strong>SaaS\/Cohort<\/strong><\/td><td>Startups\/subscriptions<\/td><td>Freshworks<\/td><\/tr><tr><td><strong>Retail Unit Economics<\/strong><\/td><td>Pricing\/store rollout<\/td><td>Nykaa<\/td><\/tr><tr><td><strong>Credit Model<\/strong><\/td><td>Loan underwriting<\/td><td>Lendingkart<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Finance Professionals Can Take Away<\/strong><\/h2>\n\n\n\n<p>So, <strong>what types of financial models are there in 2025?<\/strong> From global standards like DCF to local essentials like Working Capital and Project Finance, the range is huge but the message is simple:<\/p>\n\n\n\n<p>&#x1f4cc; If you\u2019re in finance, you can\u2019t ignore them.<br>&#x1f4cc; If you\u2019re in business, you depend on them.<br>&#x1f4cc; If you\u2019re building a career, mastering them means survival.<\/p>\n\n\n\n<p>The truth is, financial modeling is no longer optional. Whether you\u2019re a fresher stepping into corporate finance or a startup founder pitching investors, these models decide your credibility.<\/p>\n\n\n\n<p>This is where the principle of <strong>\u201cLearn to Earn\u201d<\/strong> fits best. The more models you know, the more opportunities you unlock.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Final Word: Models Are Your Career Currency<\/strong><\/h2>\n\n\n\n<p>Financial models may sound complicated, but at the core, they\u2019re just a way to answer big business questions using numbers in a structured way. In 2025, the professionals who understand the types of financial models and can build them quickly will stand out, whether in India\u2019s startup scene or in big corporate boardrooms.<\/p>\n\n\n\n<p>If you want to build this skill, structured learning helps. <strong>The WallStreet School<\/strong> offers practical training in <a href=\"https:\/\/www.thewallstreetschool.com\/financial-modelling-certification-course\/\">Financial Modeling and Valuations<\/a> that prepares you for real roles, without overwhelming theory.<\/p>\n\n\n\n<p>Because at the end of the day, finance careers follow one rule: <em>Learn to Earn.<\/em> The better you master these models, the more opportunities open up for your future.<\/p>\n\n\n\n<p>And if you want to know how to make those models better, read our guide <em>How to Build Better <a href=\"https:\/\/www.thewallstreetschool.com\/financial-modelling-certification-course\/\">Financial Models<\/a> in 2025 (Mistakes &amp; Career Tips)<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">1. <strong>What are the different types of financial models?<\/strong><\/h3>\n\n\n\n<p><strong>Ans.<\/strong> The main types include three-statement model, DCF, M&amp;A, IPO, LBO, SOTP, project finance, and working capital models. Each helps answer big money decisions in business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. <strong>What is a 5 year financial model?<\/strong><\/h3>\n\n\n\n<p><strong>Ans.<\/strong> A 5-year financial model forecasts a company\u2019s revenues, expenses, cash flow, and profits over five years. It\u2019s used for planning, fundraising, and showing investors future growth potential.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. <strong>What is the future of financial modeling?<\/strong><\/h3>\n\n\n\n<p><strong>Ans.<\/strong> The future is AI-driven, faster, and more visual with dashboards. Financial modeling skills will stay in demand because businesses still need smart humans to interpret numbers and decisions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. <strong>What are 3 types of finance?<\/strong><\/h3>\n\n\n\n<p><strong>Ans.<\/strong> The 3 types are personal finance (individual money), corporate finance (business money), and public finance (government money). Together, they cover how money is managed across all sectors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. <strong>What are the 4 types of financial accounting?<\/strong><\/h3>\n\n\n\n<p><strong>Ans.<\/strong> The 4 types are accrual accounting, cash accounting, managerial accounting, and tax accounting. Each focuses on recording, reporting, and analyzing money differently for business needs.<\/p>\n\n\n\n<p><em><strong>If you are interested in knowing more about financial modeling then definitely watch this video<\/strong><\/em>:&#x1f447;<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe title=\"Roadmap to FINANCIAL MODELLING IN 2025 | JOBS &amp; Career Opportunities after Financial Modelling\" width=\"800\" height=\"450\" src=\"https:\/\/www.youtube.com\/embed\/Gh8KjFeJDe0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>\u201cNumbers don\u2019t lie, but without the right model, they don\u2019t tell the full story either.\u201d In India today, money stories are everywhere\u2014startups getting crores from investors, big infra projects changing cities, and IPOs becoming as common as cricket news. Behind all this action is one key tool: financial models. They\u2019re not just Excel sheets anymore\u2014they\u2019re [&hellip;]<\/p>\n","protected":false},"author":40,"featured_media":8924,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[670],"tags":[825,826,827],"class_list":["post-10426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-modeling","tag-financial-models","tag-financial-models-2025","tag-types-of-financial-models"],"_links":{"self":[{"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/posts\/10426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/users\/40"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/comments?post=10426"}],"version-history":[{"count":0,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/posts\/10426\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/media\/8924"}],"wp:attachment":[{"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/media?parent=10426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/categories?post=10426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thewallstreetschool.com\/stg-new\/wp-json\/wp\/v2\/tags?post=10426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}