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What does a Financial Analyst do?

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Talent.com talent.com
Answered April 30 2021
Career Expert at Talent.com
The simple definition of a Financial Analyst is they analyze the company's financial data and help the company run more profitably as a result of this analysis. 
Daily tasks of Financial Analysts focus on research, analysis, forecasting, and reporting. 

Analysis involves looking into the financial data of the company and seeing how it performed financially based on its forecast. The analyst should be able to see if it under or over-performed and provide management with a reason as to why based on the data. 

Research involves looking at macroeconomic trends and the market since businesses do not operate in isolation. This means researching and advising the business on industry changes or how to anticipate standard industry cycles. For example, a Financial Analyst working for a residential construction company will be interested in the real estate market as a whole and will keep an eye on new home sales. 

Based on their research, Financial Analysts will prepare forecasts for the company. In the earlier example, if the sales of new homes are growing, the Financial Analyst may forecast an increase in revenue but may also recommend that the company hire extra personnel to cope with additional forecasted work. 

These forecasts and analyses usually take the form of reports. These reports can vary in length and scope based on the intended audience, but analysts are expected to deliver their numbers and recommendations to various other stakeholders.

Roles and Responsibilities of a Financial Analyst
  • Creating and maintaining an operating budget
  • Crafting or identifying investment strategies aimed at minimizing risks and losses and increasing revenues.
  • Conducting risk evaluation research
  • Analyzing investment propositions and financial portfolios to assess risk factors, using different tools and mathematical models
  • Advising investors and senior management on investment strategies, explaining and justifying any decision made
  • Creating and maintaining a forecast model
  • Evaluating if the company is eligible to invest in products by determining if it has sufficient funds
  • Monitoring the status and development of investments and other financial projects
  • Preparing monthly, quarterly, and annual financial statements. 
  • Analysing profit margins at the end of every month, reporting observations to senior management and operations leaders.
  • Overseeing and supporting financial, administrative staff to ensure deadlines are being met.