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What Does A Financial Analyst Do

Importance of Financial Analyst

A financial analyst holds a lot of importance in a business. Since every business has various departments running to get the business efficient, financial analysts play an important part in making sure that every potential investment opportunity is well analyzed before jumping into a loss-making decision. Essentially, they are like your financial analysis consultant.

You often come across this term, financial analyst, and you’re never sure what exactly they do and how they’re relevant to any business. Luckily for you, we will help you understand what a financial analyst does and why you should be thinking about hiring one.

What Is A Financial Analyst?

First thing’s first, what is a financial analyst. As mentioned before, financial analysts help in various finance-related aspects of the business. Here, you will find that a financial analyst doesn’t only have one job. From gathering all the relevant data to being a financial analysis consultant, you will find a financial analyst to take various roles. So, what does a financial analyst do? We will get to this part in the next section. It is covered in great detail to help you understand everything that a financial analyst does.

What Does A Financial Analyst Do?

So, let’s get to the main question; what does a financial analyst do? There are a series of things that they do, and they all are equally relevant. So, let’s get started with what does a financial analyst does.

Gather Data

A financial analyst’s first requirement is to gather relevant data for the business before moving on to any other steps. Here, they will have to look at all the relevant when creating financial statements, budgets, and forecasts. This would include historical data, details from the general ledger, prices of the stock, industry data, and much more. A lot of research is also required to get the right information. Therefore there is excessive use of external sites that offer data relevant to the creation of financial forecasts.

Organize Data

After the financial analyst gathers all the relevant data, it must be organized in a particular way using the right platforms. Here, the use of excel and other data organizing platforms are used to ensure that each information is added to the right location. The right categories, numbering, and other tasks are carried out by the financial analyst when organizing all the data.

Analyze Financial Results

After the organization of the data, there is a need to analyze all the results. This is an essential part of a financial analyst’s job. Here, they assess the historical patterns and offer in-depth analysis as to what extent will the business grow over the years. To develop this assessment, financial analysts need to take out ratios based on their data.

With this data, they look over the various metrics that allow them to understand what the business offers in return. Ratios such are gross margins, net margins, return on equity, debt-to-equity, earnings per share, and much more are calculated to figure out what changes the business has seen over the years.

Create Forecasts And Projections

Once the careful analysis of the historical data and the trends are measured, the financial analyst makes projections for the business through a financial model. In this, they must put in their skills and ensure that they make use of valid assumptions for the financial statements. It is not an easy task as you need the right mix of expertise to ensure it is done correctly. So, if you’re looking for someone to making forecasts for your business, then a financial analyst is who you need to reach out to.

Offer Recommendations

The financial analyst’s expertise doesn’t end with projecting numbers only. They extend to helping the business get a better insight as to what these numbers represent. For instance, there is a need to give recommendations that would allow the business to run more effectively. Financial analysts offer helpful recommendations to businesses to work on improving revenue and reducing the costs associated with the business. Most of the time, the financial analyst offers recommendations to the senior management so that proper action may be taken to work on improving the business.

Create Financial Models In Excel

One of the major chunks that come under a financial analyst’s job is to create financial models in excel. There is a range of different financial models that a financial analyst creates. These include the basic 3 statement financial model, the DCF model, and many more. There are plenty of different types of financial models to make, depending on the business’s requirements. Many business requirements differ. For instance, a company turning public may need an IPO financial model as well.

Make Presentations

The story doesn’t stop when it comes to what does a financial analyst does. Their responsibilities and tasks extend to much more than just making use of numbers. This means that they turn all the data into a slideshow presentation to make it easier for others to understand these aspects. Moreover, pitch decks and other management meetings make use of the graphical representation as well.

Generate Reports

Lastly, when we talk about what does a financial analyst does, then there is the task of generating reports. What does this mean? Essentially, financial analysts have to present key performance metrics and everything that shows the business’s performance. Here, there is excessive use of dashboards and other reports to understand the business performance and how to work on the overall performance.

Types Of Financial Analysts For Your Business

There are five major kinds of financial analysts. Each of them is relevant to different industries or different aspects of the business within the same industry. So, if you’re trying to understand what does a financial analyst does, you will have to understand the different ways they operate.

Investment planner

First, we have an investment plan for you. Here, what the financial analyst does is that they mainly make use of PowerPoint and Excel to deliver their findings, data, and analysis. The investment planner’s main role is to engage with their clients and meet their requests by carrying out their sector expertise.

Treasury Analyst

Now, we have a treasury analyst. So, what does a treasury analyst do? Essentially, treasury analysts take on the responsibility of looking after the senior management’s financial activities. This is a core function of their jobs. Most of the time, the management and analysis are mainly of the employer under which the treasury analyst works. The treasury analyst actively monitors financial activities such as cash flows, investments, and many other prominent activities.

Equity Research Analyst

Next, we have an equity research analyst. These have extensive work cut out for them as they manage and analyze both the buying party’s sides and the selling part. So, here you will find equity research analysts managing portfolios. Their main aim is to get as much investment possible to your business and ensure that the owner’s wealth increases as they carry out their processes. As the name suggests, there is great emphasis on these financial analysts’ research side and generating reports and making presentations.

Private Equity Analyst

Another type of financial analyst we have is private equity analysts. What does a financial analyst do? Well, this is somewhat similar to an equity research analyst. The major difference is that this research on private companies. Their main task is to make sure that they manage portfolios and research on private companies that investors would want to invest in. Their research requires creating financial models, take out valuations, and much more to make sure the right decisions are made.

Corporate Development Analyst

Lastly, we have a corporate development analyst focusing on the developmental aspects of a business, as the name suggests. The main tasks that corporate development analysts must do revolves around raising capital for the business, making merger and acquisition executions, and other similar tasks. Since it requires in-depth analysis and the use of a series of financial metrics to come to the right analysis. There is extensive use of financial models, analysis, and other KPIs to measure the best possibilities for the business. Most of the time, large businesses make excessive use of corporate development analysts.

Hiring A Financial Analyst For Your Business

Now that you’re clear about what does a financial analyst does, let’s take a look at where you can hire one from. You should make sure that you get on board with someone having the right skills and experience to make your business’s financial aspect much smoother and flowing. Doing so will allow you to make sure that your business finances are in good hands.

We, at Oak Business Consultant, are experts in offering you the right assistance on such matters. With a team of highly qualified financial analysts on board, you can rest assured about how we carry out your financial tasks. From financial planning to budgeting and modeling, we have a lot to offer you. So, visit our website, at Oak Business Consultant, and get a free consultation.


Oak Business Consultant has helped many Start-up and SME’s for the preparation of Business Plan, Financial Modelling, and Financial Consultancy.

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