The aim of this multi-asset modelling tutorial is to illustrate how a financial model can be built to accommodate multiple assets or business divisions in a structured way that ensures modelling consistency between assets / divisions and efficiency in model development. The intended audience are for those analysing or preparing forecasts who seek to understand and analyse financial performance at both a group/consolidated and asset/division level.
What is multi-asset modelling?
Many companies often manage or own a portfolio of assets, projects or divisions. If a company is required to analyse financial performance at both group and asset level, rather than having to build an individual model for each asset, a company can consolidate all of these assets into a single financial model – usually known as a multi-asset/division, consolidated or portfolio model.
If all of the assets can be defined within a common framework of assumptions, then the financial model can be structured in a highly efficient and consistent manner to the benefit of both the developer and user – this is essentially multi-asset modelling, though terms such as division and project are interchangeable for asset.
Please note that even where assets have as many (assumption and structural) differences as they have commonalities multi-asset modelling methods here can still be applied into your modelling to make your financial model and analysis more robust and reduce developer risk.