How is the Life of a Financial Analyst

Financial Analyst

The evolution of the finance industry has been on an unprecedented scale and every new phase has brought new financial innovations in terms of new ways of providing services to the customer and more advanced customized financial tools for investment. New jobs are created as a by-product of advancement in the industry. In the contemporary era where everything is run on data, the role of a financial analyst is very significant for the financial institution and the industry in general. Let’s see how they add value to this dynamic industry.

What do Financial Analysts do?

The role of a financial analyst is very dynamic, to say the least; it incorporates a range of tasks to be carried out by the personnel functioning in the capacity of the analyst for the firm. From collecting data to analyzing reports and making forecasts and projections they have to add value in multiple segments. Let’s dive a little deeper into some of the key roles and responsibilities handled by the financial analyst on a daily basis.

Collection & Organization of Valuable Information

It all starts with data and the more the merrier, the primary role of the financial analyst is to gather valuable and relevant data to work on and make an analysis. Most of the data collected to do the analysis are quantitative in nature. The data is collected from various sources such as the company’s database, Security and Exchange Commission (SEC), third party data providers like S&P Global, Bloomberg etc. Stock prices, historical financial and accounting data, industry-related research information, etc. are some of the examples of data collected by the financial analysts to do analysis and make predictions.

The next step after collecting relevant data is to organize it into a proper database, generally done in excel. The data that is collected is not filtered and has a lot of irrelevant added information that is unnecessary to the analysis, the data gathered is categorized, functions and formulas are applied to the database to make it more dynamic and formatting is used to make it easily interpretable.

 Analysis and Projection

When the data is organized and filtered, the financial analysts start with the analysis of past results. In order to perform such analysis they have to factor in metrics like profit margin, fixed costs, variable costs, Earning per share (EPS), debt to equity ratio, asset turnover ratio, an asset to liability ratio, return on equity, etc. The analysts have to look for patterns and trends and then have to compare the performance of the company with the industry standards and with competitors in the field. This is one of the key tasks that is carried out by financial analysts.

Coming to making forecasts and projections, after analysing complex historical records of the company the analyst has to use their financial crystal balls and make projections about the company’s future growth and performance. There are certain assumptions in place while predicting the performance of the company. Some of the mainstream forecasting methods include regression analysis, year on year growth rates, etc.

Make Recommendations

The role of the financial analyst also includes gaining valuable insights about the industry and the business and make recommendations as to how can the operations and functioning be improved in order to stay competitive in the market. Some examples of valuable recommendation by financial analysts include new areas to generate revenue, optimizing the price point, how to minimize the total costs, suggesting the proportion of fixed and variable costs to be used, methods to increase the market share and capture more customers for the business. These suggestions are presented to higher officials of the company including CEOs & Board of Directors.

Other days to day responsibilities of a financial analyst include making presentations, generating reports, etc. Building excel models with the help of financial modeling techniques are also a big part of the job when working with investment banks, equity research houses and corporate finance.


All in all the role of a financial analyst has multiple dimensions to it and requires you to excel on multiple fronts. The day to day activities includes data collection and organization, analysis & projection and making valuable recommendations to the firm. Making presentations and building excel models also comes as a part of the parcel.

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