Skills of a Financial Analyst
The skills required for becoming a financial analyst comprises of a combination of technical finance skills and non-technical behavioural skills. The technical skill includes financial modelling, equity research, merger and acquisitions, credit risk modelling, accounting software skills, IFRS knowledge, etc. Non-technical skills include behavioural skills like communication, leadership, interpersonal skills, problem-solving attitude, analytical thinking, etc.
Here is the list of Top 9 Skills required for becoming a Financial Analyst
- Accounting Skills
- Financial Modeling
- Accounting Software
- Project Financing Skills
- Corporate Finance
- Business Valuation
- MS Excel Skills
- Communication and Interpersonal Skills
- Problem-Solving Skills
Let us discuss each of the skills in detail.
List of Top 9 Skills Required for the Financial Analyst
- Accounting Skills: It is a finance area role; therefore, accounting skill is a must. A financial analyst should be well versed with the accounting principles and understand IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles). The skills relating to budgeting & forecasting, cost analysis, managing cash flow, reconciliation, etc. will help a financial analyst work effectively.
- Financial Modeling: The financial analyst should be good at financial modeling, should have a working knowledge of different types of financial models, like merger and acquisition financial model, three statement modeling, discounted cash flow, IPO modeling, etc. Financial modeling helps the financial analyst in advising management regarding various business decisions.
- Knowledge of Accounting Software: The financial analysts should have up-to-date knowledge of the organisation’s latest accounting software. They can learn it through various sources online as well as defined courses. Every company wants a candidate with a ready knowledge of accounting software. But for candidates with little or no experience, it is a bit difficult. Therefore, they can go for these courses to build their knowledge database for accounting software.
- Project Financing Skills: Financial analysts possessing project financing skills are an excellent asset for the company. For this purpose, they need to know about project finance, financial modeling, and they should have an analytical bend of thinking.
- Corporate Finance Knowledge: The financial analyst should have knowledge of corporate finance topics including that of equity research, private equity, and fixed income. These skills are required, especially when a financial analyst is working in investment banking or wants to become a fund or portfolio manager.
- Business Valuation: The financial analyst should be able to perform business valuation, i.e. calculating the fair value of the business at the time of sale of a business, partnership ownership, etc.
- MS Excel Skills: Apart from accounting software, MS Excel is the most sought-after skill in financial analyst candidates. Candidates can learn excel from online courses and a lot of free material available online.
- Communication and Interpersonal Skills: Apart from the above technical skills, effective communication and interpersonal skills are also critical. It helps a lot when communicating over email, and talking over the phone to resolve an issue. Interpersonal skill sets help while communicating with stakeholders, clients, and investors; it also helps pick up non-verbal cues.
- Problem-Solving Skills: Financial analysts need to be a problem-solver. Their very existence depends upon this ability, be it finding the solution to a complicated financial equation or decision regarding the company’s critical matter. The company depends a lot upon their analysis and advice while making crucial business decisions.
These are some of the critical skill sets that we discussed, but this is not an exhaustive list. There are many other technical and behavioural skills like analytical thinking, leadership skills, etc. which can be added to the list.
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