What is a Dimensional Financial Model?
A financial model built using dimensions is a powerful document that offers a dynamic and interconnected approach to financial analysis and forecasting. Unlike traditional spreadsheets, where data can become disconnected and cumbersome to update, a dimension-based financial model allows for seamless updates and automatic propagation of changes across the model.
About the Dimensional Microbrewery Model
In this type of model, financial data and calculations are organized around interconnected dimensions or variables that represent different aspects of the business. These dimensions include time periods, production levels, revenue channels and other relevant factors that impact financial performance.
What are the benefits of using this template?
- Data Consistency: By organizing financial data and calculations around dimensions, the model ensures consistency and accuracy across all related metrics and reports. Updates made to one dimension automatically reflect in all relevant areas, reducing the risk of errors or discrepancies.
- Flexibility and Scalability: Dimensions provide flexibility to adapt the financial model to changing business needs. Adding or modifying dimensions allows for expanded analysis, such as entering new markets, introducing new products, or accommodating evolving business strategies.
- Readability and Understanding: Dimensional models require fewer calculations making them easy to trace and more elegant to read and understand.