The work of a Financial Analyst
A Financial Analyst is an individual that works with financial analysis. They help companies or its company’s clients come up with good investment decisions.
Financial Analysts are also called securities analyst, research analyst, equity analyst, and investment analyst. They write reports for the company, describe the businesses and make an opinion of the company’s investment potential. The words often used by financial analyst are the words “buy”, “sell”, “market perform”, “overweight”, “hold”, etc. They are capable of reading financial statements and make an analysis of the commodity prices, sales, costs, expenses, and tax rates so as to determine the company’s value and project future earnings. They make a study of the entire industry and assess the
current trends in business practices, products and industry competition. It is necessary for financial analyst to be abreast with new regulations or policies affecting the industry and monitor the economy in terms of its effect on earnings.
Financial analysts are divided into two basic types: those who are analyst on the buy side and those who are analyst on the sell side. Companies who have great deal of money to invest hire analysts working on the buy side. Companies that hire this kind of analyst are those institutional investors, to include mutual funds, hedge funds, insurance companies, independent money managers, and charitable organizations, such as universities and hospitals, with large endowments. They devise investment strategies for company’s portfolio. Analysts, who work for the sell side, help securities dealers to sell their products. Companies that hire analyst on the sell side include investment banks and securities firms.
Financial Analyst plays an important role in management’s decision- making. They come up with recommendations for management to undertake. It is a position that requires competency and trust.
by Korbin Howard