Financial Analysts Essay

Length: 2 pages Sources: 2 Subject: Business - Management Type: Essay Paper: #306577 Related Topics: Fedex, Freight, Financial Ratio Analysis, Financial Management
Excerpt from Essay :

CFO

Financial data provides a lot of information about a company, and the ability to compile and understand this information is one of the core skills of the financial analyst. The financial analyst adds value to an organization, therefore, by bringing this skill. The analyst has the ability to understand financial data, to gain information and insight from it, and then communicate that insight to management. Analysts are trained in financial data, and they have methodologies that help them to understand financial data. This is a skill that most people have no training in, and even fewer have experience in, but it is a skill that can provide useful information to management about the company's performance. When management acts on that information, the value of the financial analyst becomes evident.

There are a number of ratios that a financial analyst uses to evaluate the financial performance of the company. The ratios cover a number of different topics, ranging from the liquidity of the company to its efficiency, its solvency, and its investment returns. There...

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The ratios have been developed over time, and are widely used, because of the accuracy with which they provide this information, and also because they are easy to calculate with the given financial data that is required of public companies.

A successful financial analyst is able to understand financial data. The first trait of a successful financial analyst is to be trained in the skills required to perform the job, but as McCann (2012) notes, the skills alone to do guarantee the effectiveness of a financial analyst. Ideally, a financial analyst will have strong reasoning skills, and the ability to conduct both inductive and deductive reasoning. Both types are reasoning are ultimately used in financial analysis, but many people favor on type over the other. A final skill that is critical to being a good financial analyst is strong communication skills. A financial analyst uncovers data, but that data must then be communicated to decision-makers in order for the data to be useful to the organization. The data must, therefore, be communicated to an audience that is not necessarily expert in financial analysis (though the CFO is probably among the audience members, the CEO and others need the insights in plain…

Sources Used in Documents:

References

McCann, D. (2012). Good financial analysts are made, not born. CFO.com Retrieved March 10, 2015 from http://ww2.cfo.com/training/2012/06/good-financial-analysts-are-made-not-born/


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