Introduction to Financial Analysis
A financial analyst's job is to assist companies and individuals to best decide how to manage and invest their money. They do so by gathering and analyzing financial data and reports, and creating a workable investment plan based on that information. Financial analysts often specialize in certain fields such as banking or insurance where they can better meet the needs of a specific industry through their expert advice.
- Association for Financial Professionals
- Society of Financial Service Professionals
- Certified Financial Planner Board of Standards, Inc.
- American Academy of Financial Management
Financial Analysis Job Description
Financial analysts have a variety of duties, but all of them are related in some way to the analysis of financial information in its myriad forms. They may compile and evaluate financial statements, analyze the cost of goods and services, examine income and expense, and view other economic data to determine a company's financial situation and projected earnings. They work closely with business executives and investors to better understand the company's financial prospects and fiscal management.
In addition, financial analysts closely examine stocks, bonds, and other investments to determine their potential for loss or growth. Job titles and positions in this field focus on determining the best investments and financial choices for a businesses or individuals and include positions such as, securities analysts or investment analysts who work for specific industries such as banking, insurance, securities exchanges, media, etc.
Specific job functions may include studying a corporation which plans to "go public" and sell corporate stock for the first time, analyzing a prospective merger to determine its financial feasibility, or evaluating a proposed corporate takeover or buyout. Certain financial analysts even serve as ratings analysts, determining if a business is able to pay its debts.
Financial Analysis Requirements
Since a financial analyst works closely with statistics and economic data, strong math and problem-solving skills are indispensable in addition to a solid understanding of business practices and theories.
Financial analysts must possess good communication skills and be able to comprehend and articulate accounting policies and procedures along with financial analyses, budgets and related data. They must alos be detail-oriented. Training in economic strategy, tax laws, pricing, risk management, and stock and bond valuations is helpful as well.
A financial analyst must have, at minimum, a bachelor's degree in a field such as finance, economics, accounting, statistics or business. Some positions, especially ones that are higher paid, require a master's degree, and may also require certification such as the Chartered Financial Analyst (CFA), or specific licensing, in a particular industry.
Financial Analysis Career Outlook
According to the Bureau of Labor Statistics (BLS), jobs for financial analysts are expected to increase by approximately 20 percent by 2018, much faster than the expected average growth for other occupations. There is strong competition in this well-paid field, especially for entry-level positions.
Average annual salaries vary greatly for financial analysts but range from approximately $45,000 to $146,000 for Chief Financial Officers (CFO) in large corporations.
Financial Analysis Trends
Indeed.com, which projects employment trends based on data pulled from millions of job searches, shows that financial analyst positions have risen rapidly over the past several months and the US Bureau of Labor Statistics predicts that this will be the one of the fastest growing occupations over the next 10 years.