Overview · What & why
A decision, before a calculation.
A financial model is a linked explanation of a project, expressed in numbers. It starts with assumptions, turns them into costs and cash flows, then tests a decision. Separate inputs from calculations and outputs so a reviewer can see what was assumed and what was derived. More rows do not necessarily produce better judgment. A model should answer a defined question before it tries to represent every detail.
A concrete example
Riverton has 100,000 SF at $10/SF/year and 95% occupancy. Revenue is $950,000; $50,000 of owner expenses leaves $900,000 of NOI. Changing occupancy must flow through revenue, NOI, value and debt coverage.
What to remember
An output is only as defensible as its inputs and the links between them.
Before using this in a project: Rent evidence, area schedule, scope estimate, operating budget and a written decision criterion.