Financial Modeling

---
name: Financial Modeling
description: Build models that are transparent and auditable.
---
# Financial Modeling

A model is only as good as a stranger can follow it. The number at the bottom matters less than whether a reviewer can trace every assumption that produced it.

## Principles
- **Assumptions in one place.** Every input (growth rate, price, churn) lives in an assumptions block, referenced everywhere else. Change it once, the model updates.
- **Formulas, not hard-coded values.** A number typed into a formula is invisible and wrong forever. Every cell either is an input or computes from inputs.
- **One direction of flow.** Inputs → calculations → outputs. Don't let outputs feed back into inputs without an explicit circular reference you intended.
- **Audit as you build.** Trace Dependents on every output. If the chain doesn't end at an assumption, the model is broken.

## Stress test
Flip assumptions to extreme but plausible values. If the model explodes or behaves paradoxically, you've found a fragility before the investor does.