The Role of Financial Analysts in Finance

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Financial Analysts

Finance is an industry that’s filled with numbers, money, company’s, and deal making. People are looking for any way in which they can make money, and generate returns either for their company, clients, or themselves. The industry stretches far and wide and has a lot of small niches within the larger financial industry.

To rise up the ranks, and make the big bucks takes time, energy, expertise, and work. If you’re trying to build a career in finance, it all starts with the financial analyst position. Almost everyone who starts out in Finance, has to start as a Financial Analyst. It’s the place where people learn and get their feet wet in finance. A lot of the work that gets done within finance is passed on to the financial analysts.

What does a financial analyst do?

Financial Analysts are the people who have to do the heavy lifting. This means analyzing numbers, learning about company’s businesses, seeing how the current market outlook looks. They are the ones creating the documents, memorandums, and presentations for the senior level people. The work the vice presidents, directors, and managing directors do is based upon the work of the analyst. This means all the research and information that’s needed to explain the transactions or deal has to be uncovered or found by the financial analyst.

Nowadays, there are a lot of documents, processes, and procedures that have to be done in order for a deal or transaction to be completed. Sometimes this might mean a financial model. In that case, there’s a lot of data that needs to be input into the model, then it has to be sized to fit the criteria or the assumptions the company wants to project or see. Every number and every assumption made has to have some data or evidence to support it. Each number is going to have an effect on the outcome of the model and has to have support behind it.

Higher ups and senior level people want to be the one who analyzes the work and makes the decisions as to how to move forward. The financial analyst is the person who has to create the documents in order for them to review them and make decisions. Every deal or transaction ahs a lot of legwork that goes into it. Each deal has different numbers, a different structure, and different terms and conditions that go with it. The financial model, presentation, and memorandum have to display and correctly show the transactions specifics.

The financial analyst is a key part of the puzzle within finance. Without them, a lot of deals, work, and transactions wouldn’t occur. Once you see the data or numbers in action, then you’re able to understand what’s going on behind the numbers, from there you can decide a fair price point, and make an offer to move forward. You can’t really conduct business without understanding what’s going on behind the numbers or have an idea of the direction you’re going to take with the situation. That’s where the analyst provides the framework and the compilation of materials for the senior level people to analyze and decide how to move forward.