Financial Analyst Job Description Guide
A Financial Analyst is a person who implements the fundamentals of financial analysis in order to evaluate the position of the company from the point of view of raising capital in the form of debt or equity, credit ratings, or budging. They are expected to analyze various scenarios including but not limited to current situations in the market and come up with intelligent inferences.
For example, a ‘credit analystCredit AnalystCredit analysis is the process of drawing conclusions about an entity's creditworthiness based on available data (both quantitative and qualitative) and making recommendations about perceived needs and risks. Credit analysis also involves identifying, assessing, and mitigating risks associated with an entity's failure to meet financial commitments.’ in a bank is primarily responsible for deciding if a loan should be given (also called as loan-sanction by bank officers) to people who come to the bank to borrow money. There are several factors that are responsible for deciding if a person can get a loan from the bank.
Factors to Get a Loan From the Bank
- Whether the person who wants to borrow money is employed or not?
- If there is any other loan already taken by the person?
These are some of the many factors a ‘credit analyst’ takes into account before making a decision on whether the bank should lend money or not.
Similarly, a ‘financial analyst’ is one who ‘studies’ a company and tries to make predictions about the financial health of the company in the future. As we mentioned earlier, an analyst has to look at multiple factors before making his/her decisions, similarly, a financial analyst also has several factors to analyze and understand before reaching any conclusions about that particular company.
The foremost Financial Analyst job description is to study financial statements of companies. Just like we, as students, are issued grade-cards by our school teacher with different grades for different subjects and an overall assessment of our year-round performance, companies also issue their financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels. which consist of information on how they performed their businesses throughout the year.
Sample Job Description
Below is a sample Financial Analyst Job Description.
Financial Analyst supports and analyzes company financials monthly, quarterly as well as annual and assists in preparing and forecasting annual budget. Below are some of the key responsibilities of a Financial AnalystResponsibilities Of A Financial AnalystA financial analyst analyses a project or a company with the primary objective to advise the management/clients about viable investment decisions. They do a thorough financial analysis and make suitable objective projections to arrive at their conclusions. –
- Support monthly and year-end accounting
- Analyze business units, its performance on a monthly basis and provide budget vs variance analysis as well as forecasts
- Financial modeling resulting in forecastingFinancial Modeling Resulting In ForecastingFinancial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact. of revenue, expenses, headcounts, balance sheet and cash flows
- monitor the key financial metrics of the company
- perform performing ad-hoc analysis and new project break-even analysisBreak-even AnalysisBreak-even analysis refers to the identifying of the point where the revenue of the company starts exceeding its total cost i.e., the point when the project or company under consideration will start generating the profits by the way of studying the relationship between the revenue of the company, its fixed cost, and the variable cost.
- Provide key business analyses and strategic recommendations on pricing, investment, make vs. buy, ROI cost reduction and controls.
- Assist in due diligence and identification of business acquisition targets
Below are the key qualifications required by Financial AnalystQualifications Required By Financial AnalystIf you are planning to become a financial analyst, you will need to fulfill specific educational qualifications. As a minimum criterion, you will require a bachelor’s degree. This will help you enter the job profile of a financial analyst at the elementary level. –
- Typically a graduate level course in Accounting & Commerce, Finance is necessary
- Candidates with Engineering background/STEM courses are preferred as they have quantitative and programming skills
- Candidates from Business Schools with specialization in Finance have an advantage as they are able to read financial statements easily, are aware of different accounting practicesDifferent Accounting PracticesAccounting practice is a set of procedures and controls used by an entity's accounting department to keep track of accounting records and entries. Other reports are generated based on accounting records, such as financial statements, cash flow statements, fund flow statements, payroll, tax workings, payment and receipts statements, and so on, and they form the basis of the auditor's reliance while auditing the financial statements. and are generally able to understand market conditions more easily
- Stronghold on Statistics-forecasting techniques, risk modeling, Value At Risk calculations
- Applied Mathematics and Economics knowledge- to analyze current economic condition and predictions for future economic indicators
- Mathematical modeling for in-depth data analyses using traditional and advanced methods
- A Financial Analyst is expected to have good presentations and communication skills.
Here is the list of top skills and knowledge that a Financial analyst must possess –
- Working knowledge of MS-Excel
- Knowledge of database management systems is required to store data
- Hands on Experience in VBA-Macros
- Knowledge of accounting proceduresAccounting ProceduresThe accounting procedure is the process of standardized nature that performs a specific accounting function designed to incorporate better risk management policies to complete these functions efficiently. It includes billings, invoices to suppliers, bank reconciliation, requiring comprehensive and streamlined procedures. and financial reporting practices
- Ability to design dashboards showcasing information in the data, one should be able to work on software like PowerBI
- Financial Modeling in excelFinancial Modeling In ExcelFinancial modeling in Excel refers to a tool used for preparing the expected financial statements predicting the company's financial performance in a future period using the assumptions and historical performance information.
- Strong command over English and good conversational skills
- Ability to swiftly coordinate amongst different departments of an organization which may all be using data stored by him, reports generated by him or recommendations made to the senior management
- Ensure timely communication of results/reports to key personnel within the organization as well as clients
In conclusion, as a financial analyst, one is responsible for showcasing the ‘report card of the company’ to various stakeholders. One is also responsible for making future predictions on where the company analyzed is headed in business. In the end, it can be seen that a financial analyst needs to have different skill-sets for different financial analyst jobs for graduates like financial statement analysis, database management, modeling, and predictions, and report writing.
This has been a guide to Financial Analyst Job Description. Here we looked at who is a Financial Analyst, top details of its job, key skills you should possess as a financial analyst, primarily qualifications you must possess as a financial analyst. You may also have a look these articles below to learn more about Corporate Finance –