All businesses have one sole aim, i.e. to make a profit. In order to be profitable, they take a number of steps such as increase sales, utilize their resources optimally, invest in profitable ventures, look for mergers and acquisitions, etc. To make sure that the financial decisions that they have already taken or are about to take will translate into profits, organizations today depend on the services of financial analysts. These analysts thoroughly study the market trends, company's accounting books, past profits, and all other financial data to help the company arrive at the appropriate profitable decisions. From this short job description, one can conclude that accounting and finance are the main skills required to be successful in this field.
In order to become a financial analyst, a person needs to possess a bachelor's degree in accounting or finance or economics. These days, many companies prefer professionals who have an MBA degree. Having a Chartered Financial Analyst (CFA) certification is definitely an edge over other candidates, while applying for this job.
Financial Analyst Skills
Besides these educational qualifications, a person who wants to be a financial analyst should possess a certain set of skills which will help him/her do the job in a better way. Here are the basic, yet important skills required for this position.
Proficiency in Mathematics and Statistics
A financial analyst helps in the analysis of all departments of the business, such as marketing, research and information technology. For his analysis, he studies various charts, statistical data and spreadsheets pertaining to these departments. Thus, a person aspiring to be a financial analyst, should be an expert in mathematics. Being proficient in studying and interpreting statistics, and a thorough understanding of calculus are some other mandatory skills for this job.
Accounting and Financial Skills
His main duty is to assist in the closing of the accounting books of a company at the end of the year. He needs to help in the preparation of the journal entries, closing accounts, and reassessing the cash balances. He performs the auditing and may even assist in the budget management of the company. Since financial management is an analyst's main job, he should have a thorough understanding of the various accounting procedures and methods.
Knowledge of Government Laws and Regulations
A financial analyst is required to work in an environment which also includes legal aspects and government regulations. Thus it is good for him to be well-versed in topics related to legal codes, court procedures, agency rules, and labor laws. He should be able to make decisions according to the government rules and regulations, as these rules keep on changing from time to time. Proper knowledge related to various laws helps in the smooth running of the company, and also helps it stay away from unwanted disputes.
In today's times, a he should have good computer skills as well. Knowledge of specific software programs will help study and compare the various financial statements of the company. A financial analyst has to make presentations, so he should know how to work on Microsoft PowerPoint too. He should be an expert in word-processing programs, spreadsheets and database programs.
Whether the company makes a profit or a loss depends a great deal on the information and analysis that a financial expert provides. As a person progresses from a junior position to a senior position in this field, his job changes from being a researcher and an analyzer to that of a person who is an active participant in financial planning and decision-making of the organization. In fact, a company basis its investment decisions, whether in a project or a department or a resource, on the recommendations of a financial analyst. This makes this job highly important, as the responsibility attached to it is very big too. Therefore, a person should be mentally tough to survive in this profession.
While gathering information about the work policies, procedures and production methods, a financial analyst has to interview employees working at various levels in an organization. Afterwards, he has to interpret the information collected in financial terms, and present it before the management. He has to interpret this complex financial data and information in such a way that the various managers in the company can understand it easily. All this requires him to develop strong communication skills, both written as well as verbal.
There are numerous career opportunities for financial analysts in various industries such as banks, manufacturing companies, and investment firms. The set of duties and the required skills may vary from industry to industry, however, the educational requirements more or less remain the same. The salary can be anywhere between $60,000 to $80,000, depending upon a person's experience, the industry he is in, and the location. The kind of salary, responsibility and challenges this occupation offers is second to none. So if you love number crunching, this is the right profession for you!