Financial Analyst
Financial analyst
An individual or an organization needs to manage its wealth well. Although, there are varied economic counsellors, for an organization, a financial analyst provides in-depth and logical inputs and reports to decision makers for a favourable economic outcome. Essentially, he researches macro and micro economic situations, with multiple economic inputs, such as company fundamentals, governmental policies, industry trends, business cycles and competitive environment to make business related industry recommendations. Usually, the financial analysts analyses multiple economic parameters and recommends a view on the likely performance of a company's stock. These stock reports could be based on technical or fundamental analysis.
As such financial analysts are specialists and experts in their respective domains and are familiar with complex financial models to predict future economic conditions, and making valid recommendations and conclusions. It needs to be appreciated, that the credibility of the financial analyst and the firm he represents is hugely dependent on the veracity and analysis deduced by analyst, since this would reflect on the stock price movements enormously.
Functions
Services of top-notch analysts are often requisitioned by investment banks, hedge funds, broking houses, etc, in which they conduct due-diligence, forecasting and measuring the financial health of a company, while providing proposal to the senior management for buy-outs or for mergers and acquisitions or while investing in a promising start-up company. Essentially, a financial analyst performs financial analysis for external or internal clients. An analyst thus, will need to comply with all legal and statutory protocol requirements. There are three segments for a functional analyst:
€ There are buy side firms such as a mutual fund, where the financial analyst studies various companies, executes analysis and research provides recommendations and ratings whether to invest in the company. This is purely in-house research.
€ Conversely, there are sell side firms which are primarily research houses or brokerage firms. They analyze companies and write detailed equity research reports and make the reports available to the clients on a commercial basis.
€ In the case of investment banks, the financial analyst's function is to cover IPOs process and M&A deals. The analyst inputs are vital in these deals.
In the case of corporate financial analyst, he evaluates a firm's functional data, evaluates present versus historical data and provides savings selection schemes. In addition, he can detect the trends of liquidity by assessing various ratios. They usually normalize the data of different companies to make them facilitate and uniform conducting peer analysis. This allows the clients are the best to make a perfect decision about their investments and as per their requirements.
Some analysts of finance also referred to as ratings analysts; they assess the capability of governments and companies that provides bonds to reimburse their debits. Based on their analysis, the rating companies issue the rating of a debt issue of the issuer.
Skills Sets
To be a successful financial analyst, the following skills are necessary:
€ Sound analytical skills
€ Passion in analyzing and understanding companies in depth
€ Robust ability in valuation skills.
€ comprehensible monetary and quantitative ideas
€ Capable to build financial model.
€ Industry expertise in Telecom, Media, Technology, Insurance, Banking, Food & Beverage.
€ Sturdy systematic and communiqu© expertise.
Ethical issues
€ Recommendations by financial analysts on the stocks and shares owned by organizations utilizing them may seem to be potentially biased. Hence disclosures are mandatory.
€ Independent researchers are usually preferred, since they are not an investment firm part and neutrality and transparency are high. However, there is a temptation for analysts to behave as stock sellers and lure investors into "overtrading."
As with any other specialist profession, fees rise with analyst proficiency and reputation. It is also a high stress, high reward and satisfying work.
An individual or an organization needs to manage its wealth well. Although, there are varied economic counsellors, for an organization, a financial analyst provides in-depth and logical inputs and reports to decision makers for a favourable economic outcome. Essentially, he researches macro and micro economic situations, with multiple economic inputs, such as company fundamentals, governmental policies, industry trends, business cycles and competitive environment to make business related industry recommendations. Usually, the financial analysts analyses multiple economic parameters and recommends a view on the likely performance of a company's stock. These stock reports could be based on technical or fundamental analysis.
As such financial analysts are specialists and experts in their respective domains and are familiar with complex financial models to predict future economic conditions, and making valid recommendations and conclusions. It needs to be appreciated, that the credibility of the financial analyst and the firm he represents is hugely dependent on the veracity and analysis deduced by analyst, since this would reflect on the stock price movements enormously.
Functions
Services of top-notch analysts are often requisitioned by investment banks, hedge funds, broking houses, etc, in which they conduct due-diligence, forecasting and measuring the financial health of a company, while providing proposal to the senior management for buy-outs or for mergers and acquisitions or while investing in a promising start-up company. Essentially, a financial analyst performs financial analysis for external or internal clients. An analyst thus, will need to comply with all legal and statutory protocol requirements. There are three segments for a functional analyst:
€ There are buy side firms such as a mutual fund, where the financial analyst studies various companies, executes analysis and research provides recommendations and ratings whether to invest in the company. This is purely in-house research.
€ Conversely, there are sell side firms which are primarily research houses or brokerage firms. They analyze companies and write detailed equity research reports and make the reports available to the clients on a commercial basis.
€ In the case of investment banks, the financial analyst's function is to cover IPOs process and M&A deals. The analyst inputs are vital in these deals.
In the case of corporate financial analyst, he evaluates a firm's functional data, evaluates present versus historical data and provides savings selection schemes. In addition, he can detect the trends of liquidity by assessing various ratios. They usually normalize the data of different companies to make them facilitate and uniform conducting peer analysis. This allows the clients are the best to make a perfect decision about their investments and as per their requirements.
Some analysts of finance also referred to as ratings analysts; they assess the capability of governments and companies that provides bonds to reimburse their debits. Based on their analysis, the rating companies issue the rating of a debt issue of the issuer.
Skills Sets
To be a successful financial analyst, the following skills are necessary:
€ Sound analytical skills
€ Passion in analyzing and understanding companies in depth
€ Robust ability in valuation skills.
€ comprehensible monetary and quantitative ideas
€ Capable to build financial model.
€ Industry expertise in Telecom, Media, Technology, Insurance, Banking, Food & Beverage.
€ Sturdy systematic and communiqu© expertise.
Ethical issues
€ Recommendations by financial analysts on the stocks and shares owned by organizations utilizing them may seem to be potentially biased. Hence disclosures are mandatory.
€ Independent researchers are usually preferred, since they are not an investment firm part and neutrality and transparency are high. However, there is a temptation for analysts to behave as stock sellers and lure investors into "overtrading."
As with any other specialist profession, fees rise with analyst proficiency and reputation. It is also a high stress, high reward and satisfying work.
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