Why is financial analysis important?
Financial analysis reveals whether an organization is operating and can continue to operate at a profit. So it is a crucial part of the decision-making process for organizations interested in keeping their clients. It is also vital for investors looking for suitable investment opportunities. As you collect data to generate reports, you can evaluate trends, create policies, and define long-term projects and budgets. Without proper analysis, you could make these decisions blindly or based on instinct. A solid analysis provides the decision-makers with a more concrete foundation on which to base their decisions. Besides decision-making, the financial analysis also augments an organization’s problem-solving capabilities, minimizing downtime and maximizing efficiency to a reasonable degree.
What skills should I have to be a financial analyst?
If you want to be a junior analyst, you will need skills to sift through and gather relevant data, create models, and update spreadsheets. If you are looking to be a senior analyst, you will need skills to develop investment strategies, present findings to management and/or investors, and suggest marketing ideas. For either position, a keen understanding of math and finance, as well as accounting and data analysis, would be helpful.
What Will I Learn?
- Relationship of risk and return
- How to value companies
- How risk management works
- How to select stocks
- Understand and Analyze a balance sheet
- How to analyze a company’s business performance
- How to build financial models