A good financial model is “correct” and “user-friendly” and has the following attributes:

• Generates useful insights that the intended audience(s) can quickly grasp
• Gives confidence that the model is working as intended
• Easily understood and manipulated by its intended audience(s) without requiring extensive modeling experience (e.g., all assumptions/inputs are segregated and identified, rather than buried within formulas)
• Easily modified and maintained by its owner as the underlying conditions change
• Focuses on the big picture and gives priority to the most material aspects of the business by employing appropriate simplifying assumptions and by relegating details to separate but related sub-models
• Based on reasonable and justifiable assumptions
• Based on logically correct economic and financial principles
• Avoids errors in implementation, such as incorrect or overly complex formulas