doi.org/10.52340/eab.2024.16.04.09

The financial model allows us to analyze the profitability of the investment project, estimate the future value and formulate relevant decisions based on the received data. The financial model of an investment project is created not only for the reflection and analysis of future prospects, but also for the performance of various tasks [Tjia, 2018]. Since the construction of the model is based on hypotheses, it is necessary to update it regularly - based on real sales, revenues, expenses, etc. In general, the creation of a financial model involves usage of specialized software tools based on initial parameters, calculations and results. A financial model reflects the essence of a planned business, interconnected by financial forms. These forms should be structured and focused on the profit of the project, its cash flows, balance sheet. Financial models are different depending on the purpose of usage, basic principles, forecast period and various criteria.
To create a complete financial model of an investment project, information about the project is needed, which takes into account income, expenses, investments and sources of financing, as well as macroeconomic information - tax rates, exchange rates, inflation and discount rates.
All the data included in the model should be relevant to the project, and the calculation gives us the basis to check the correctness and reliability of the model. Checking the model allows us to find flaws, specify parameters and, if necessary, take measures and make appropriate adjustments.
Based on all of the above, the financial model is a powerful tool for predicting the results of the investment project, assessing risks, optimizing financial processes and making informed and successful decisions [Barbakadze. 2009]. The creation of a competent financial model contributes to the improvement of the efficiency of financial management and creates the basis for the effective development and successful operation of an investment project.
The purpose of constructing a financial model should be clearly defined, namely, what problems should be solved by its creation, who are the final users and what will be the result. In addition, the financial model should be as real and accurate as possible to ensure the analysis and assessment of the current and future financial situation, which may affect the effectiveness of investment projects (PV, NPV, IRR, PBP).
Constructing a financial model is a powerful tool for predicting the results of an investment project, assessing risks, optimizing financial processes and making informed and successful investment decisions. A competent financial model will improve the effectiveness of financial management decisions and create a basis for successful activity.

References:
• Pignataro P. (2022). Financial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity. John Wiley & Sons
• Tjia J. S. (2018). Building financial models. Third Edition: The Complete Guide to Designing, Building, and Applying Projection Models. McGraw Hill
• Barbakadze Kh., Kakashvili N. (2021). proektis dapinanseba - kompaniis tsarmatebis paktori. [Project Financing - the Success Factor of the Company. "Economics and Finances" #4. pp. 8-17.] in Georgian
• Barbakadze Kh., Kakashvili N. (2021). sabrunavi kapitalis martvis srulqopis sakitkhis shesakheb. [On the Issue of Perfecting Working Capital Management. XV International Scientific Conference "Government and Society - 2021". Technical University of Georgia.] in Georgian
• Barbakadze Kh. (2009). sainvestitsio proektebis dapinansebis riskebis analizi. [Analysis of the Risks of Financing Investment Projects. "Economy and Business" #2. pp. 75-86.] in Georgian
• Pereverzeva V.V. (2018). Mekhanizm proyektnogo finansirovaniya pri realizatsii investitsionnykh proyektov. [the Mechanism of Project Financing in the Implementation of Investment Projects. No. 3. pp. 24-32]. https://vest.rea.ru/jour/article/view/494/441
• Tikhomirov D.V. (2024). Finansovaya model' investitsionnogo proyekta: vozmozhnosti i ogranicheniya standartizatsii. [Financial Model of Investment Project: Possibilities and Limitations of Standardization. Izvestia. 1(145), pp. 37-45]. https://sciup.org/148328254
• AI in Financial Modeling and Forecasting. https://www.solulab.com/ai-in-financial-modeling/

Keywords: Investment project, financial model, investment decisions, forecasting, risk assessment.
JEL Codes: E62, F21, G11, O16