As IT modelling software

information on the 2 types of modelling, advantages and disadvantages and the modelling features.

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Financial modelling

done with spreadsheets, which have lots of features with make them ideal:

  • Formulas- preform calculations on the data and automatically update the page when data's changed
  • functions which are built in complex formulas
  • varibles- which hold key data about the model
  • page is layed out in a logical way (in rows and columns)
  • it's easy to replicate  formulas and functions by dragging them across or copying and pasteing them.
  • able to preform 'what if' tasks, which is used to predict certain things in the model, the user justs adjusts the data and then sees what effect it has on the rest of the model eg- if a spreadsheet was modelling a new product's revenue then the user could change the price, sales figures and budget to see how these changes would effect the  total profit of the product.
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object modelling

  • creates a vertual representation to model things like buildings bridges and areoplanes- users can see how differnt events will effect their model
  • e.g, a designer of plane will want to see how it will behave in different flying conditions or how the length of the wings will effect it's flight.
  • they can be used to change or test the design and see how it effects the model
  • CAD is a example of object modelling.
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advantages and disadvantages of modelling


  • they can be used by different people in different situations
  • no addtional software needed as they are a standard tool, most people can use them so no training is needed
  • values can be shown in a automatic graph, so trends can be seen
  • only one model needs to be made, if the real thing was built a new one would be needed for every change made which is expensive
  • safer than real thing- to test a plane it won't risk peoples lives.
  • they can be slowed down or sped up to see effects that are hard to see in real life.


  • hard to make a good model takes lots of time and testing
  • might not give a accurate representation of the real thing
  • some things are hard to model as they have lots of varibles like human behaviour
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formulas functions and varibles

  • a formula is a instruction given to the computer to process data in specific cells, they are typed into the bar by the user and are simple calculations like C4+D5+E6
  • functions are standard rountines that are builtin to the spreadsheet, these are more complcated formulas
  • some common functions are: SUM- calculates total range of cells, IF- returns 1 value if the condition given is true and a differnt value if it's false, AVERAGE- calculates the mean from a range of cells
  • varibles are identifiers(a cell refernce like A3) they are in formulas and are importantin what if situations as they let you update lots of cells by just changing the varible.
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questions and exam questions


  • name a type of software used for modelling objects
  • explain the importance of what if analysis to computer models
  • what do formulas do in modelling

exam questions

  • explain 3 advantages of using a spreadsheet for financial modelling
  • describe what functions and formulas are in a spreadsheet giving a example of each.
  • both worth 6 marks
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