Financial modelling is a new emerging skill that has become one of the most highly sought after in various industries today.
The main objective of a financial modelling analyst is to create an abstract of a real-world financial situation, wherein the financial portfolio of a business or any other investment is presented in a mathematical model for the following purposes:
- Evaluate the current and future financial conditions of a business to guide its policy and decision-making.
- Forecast future resources required—equipment, manpower, bigger location, etc.—and outline the steps on how to finance them.
- Prove to potential investors the profitability of the business and the benefits of investing in your business plan.
- Draw the roadmap to profitability, predict and quantify risks as well as identify new market opportunities along the way.
Irrespective of your level, financial modelling itself is a skill that can help you establish a career in the finance industry. But, to be good in the field, there are certain skills that you should possess to become one of the experts in financial modeling and analysis.
Excel is heavily used in financial forecasting. It means you both have to be productive and efficient in using the program. However, it takes more than knowing how to use Excel inside-out. You also have to be selective about the tools and formulas you use to make a complex model seemingly easy and understandable for your clients.
A solid understanding of accounting is a must in any finance career. This includes concepts like investment appraisal techniques, matching principle, accruals, and revenue recognition, as well as skills to read financial statements, dissect them, and make sound decisions based on the data accumulated.
As an analyst, it’s your responsibility to look at everything in detail to identify patterns, correlations, even anomalies, to advise your client on how to take things forward. As you solve a problem, you will also have to make sure that no new problem arises in the process.
Your problem-solving skills go hand in hand with your ability to make decisions or aide the decision-making process based on your financial model. With your responsibility to keep a record of a company’s financial statements, you should be able to lead the organization to make smart, informed decisions.
Time Management Skills
Building a financial model is crucial and so is presenting it on time. Prioritize tasks based on urgency, set a time limit to complete each task, keep things organized, and ultimately, make a plan. This is where you can also benefit from learning keyboard shortcuts to help save time and finish your model as early as possible.
One of the hallmarks of an expert financial modelling analyst is their ability to simplify complex data in a way that clients can easily digest. They also have to be able to create a presentation that not only looks professional but also has clean formatting and clear charts and graphs.
Skills in financial modelling can open up a wealth of opportunities that can help you land a job role with a good salary.
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