Financial modeling is the process of creating a mathematical representation of a financial situation or a financial asset, typically in spreadsheet software like Microsoft Excel or specialized financial modeling software. It involves forecasting future performance based on historical data and assumptions about future conditions.

Financial models are used for various purposes, including:

• Valuation: Determining the value of a company, asset, or investment opportunity.
• Budgeting and Planning: Creating budgets and financial plans for businesses.
• Forecasting: Predicting future financial performance based on historical trends and assumptions.
• Investment Analysis: Evaluating the financial feasibility and potential return of investment opportunities.
• Scenario Analysis: Assessing the impact of different scenarios or events on financial outcomes.

Financial modeling requires a solid understanding of accounting principles, finance concepts, and spreadsheet skills. It's commonly used in investment banking, corporate finance, private equity, and other areas of finance to support decision-making processes and strategic planning.