Financial modeling involves creating an abstract representation of a real-world financial situation to project and forecast future performance based on historical data and assumptions. The primary objectives are to project and forecast a company's historical performance and assumptions about the future. Essentials to building effective models include following standard formats, maintaining proper spreadsheet design with appropriate headings, organizing assumptions documentation, and facilitating data entry in one place. Financial models have various applications and users in business planning, investment banking, credit ratings, project finance, mergers and acquisitions, corporate finance, and equity research.