What are the five golden principles of financial modeling?

1. Attention to detail – it’s usually the little assumptions or minor mistakes that can throw everything off

2. Understanding the business – knowing the business drivers and key cost ingredients

3. Knowledge of how changes in the environment will affect the business – this helps in sensitivity analysis as well as forecasting

4. Knowing the accounting practices of the target region (i.e IFRS or GAAP)

5. Avoid analysis paralysis – keep the materiality concept in mind