A financial analyst is someone who makes business recommendations for an organization based on analyses they carry out on factors like market trends, the financial status of a company (or companies) and the predicted outcomes of a certain type of deal. Analysts typically have academic backgrounds as business, finance or accounting majors and are numbers-driven individuals who are comfortable interpreting data and making recommendations based on that data.
Standard Job Description:
Financial analysts are primarily responsible for creating financial models that can predict the outcome of certain business decisions. In order to do this properly, they need to aggregate a large amount of financial data while also taking in account factors like financial market trends and past transactions of a similar nature. Because the role can be quite different depending on where an analyst works — for example an analyst at an investment bank will be much more focused on assisting with deals and mergers that one working for an insurance company — the industry an analyst chooses to go into defines their day-to-day responsibilities. Overall however, analysts play a significant part in providing decision-makers with the information they need to increase revenue and manage assets successfully.
Financial analysts can be divided into two categories: buy-side analysts and sell-side analysts.
1. Buy-side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include hedge funds, insurance companies, independent money managers, and nonprofit organizations with large endowments, such as some universities.
2. Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.
Some analysts work for the business media or other research houses, which are independent from the buy and sell side.
Key Job Responsibilities:
1. Recommend individual investments and collections of investments, which are known as portfolios.
2. Evaluate current and historical financial data.
3. Study economic and business trends.
4. Examine a company’s financial statements to determine its value.
5. Meet with company officials to gain better insight into the company’s prospects.
6. Assess the strength of the management team.
7. Prepare written report.
- Experience of Financial Control Mechanisms
- Significant analytical skillset, including the utilization of BI and reporting tools,
- StrongQuantitative abilities
- Experience with Global Financial Planning & Analysis
- Audit Adaptive
- Advanced computer software skills, including writing macros in Excel
- Other accounting packages Experience in Business analysis.
Graduation in Finance related field, example-BBA, B.Com., BMS, etc. Masters in the same field will be an advantage, example-MBA/MIM/PGDM-Finance.
1. License from Financial Industry Regulatory Authority (FINRA).
2. Chartered Financial Analyst (CFA) certified.
Financial Modelling, financial research, financial analysis, equity valuation, Investment Banking, Risk Management, Research Analyst, Portfolio Management, Credit Analyst, Risk Analyst,
1. Portfolio managers
2. Fund managers
3. Ratings analysts
4. Risk analysts
Screening Questions/Assessment Parameters:
1. Experience with Global Financial Planning & Analysis and Audit, Business Analytical skills.
2. Experience of Financial Control Mechanisms.
3. Experience in Advanced computer software skills, including writing macros in Excel and other accounting packages.
1. Accounts Payable. Accounts Payable is the amount owed by an organization to others for goods or services received. Buying from suppliers
on credit will generate accounts payable.
2. Accounts Receivable. Accounts Receivable is the amount due to an organization for goods delivered or services rendered. Selling to customers on credit will generate accounts receivable for a business.
3. Accounts Payable Days Ratio. Average number of days a firm takes to pay for items purchased.
4. Accounts Payable Turnover. This ratio measures how effective management is in paying its suppliers.
5. Assets are resources owned and employed by an organization that confers future economic benefits.
6. Audit. Audit is the process of examination and verification of a firm’s books of account, transaction records, and other relevant documents, including financial models.
7. Quick Ratio. Quick Ratio or Acid Test is one of the financial analysis ratios that provides a more prudent measure of short-term liquidity recognizing that inventory cannot always be readily converted into cash.
8. EBITDA. Earnings Before Interest, Taxation, Depreciation, and Amortization.
9. EBIT. Earnings Before Interest and Taxes.
10. EBIT Margin. EBIT / Sales.
1. Amortization. The gradual reduction of a financial amount over time.
2. Capital. Capital represents the funds provided to an organization in the form of equity or debt.
3. COGS. Cost of Goods Sold.
4. Common Stock. Most shares tend to be common stock carrying one vote each and with an equal right to a proportionate share of dividends. Common stock dividends tend to rise as profits grow.
5. Equity. Equity is total assets less total liabilities. Also called shareholders’ equity, net worth, or book value.
6. Coverage Ratios. Ratios that analyze a company’s liquidity or its ability to “cover” its financial debt obligations. An example of a coverage ratio is EBITDA / Interest expense.
7. Contributed Surplus. Most stock is originally issued with a nominal/par value attached to it (e.g., one share in ABC Inc. has a nominal value of $1.00). However, if shareholders buy shares from the company for more than the nominal value (e.g. $1.50), then the excess is called the contributed surplus.
8. Current Ratio. Current Ratio measures short-term liquidity, whether or not a company will have the ability to cover its obligations in the short term.
9. DCF (Discounted Cash Flow analysis). A financial evaluation method that takes the “time value of money” into account.
10. Debt Financing. Raising money for a business through loans or by issuing bonds.