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What are Disadvantages and Advantages of Financial Statement Analysis?

Posted on by Imarticus Learning

Companies choose different processes to be profitable, safely increasing their productivity. One of the safest ways is the analysis of financial statements; its use makes it easier to respond to possible problems. The advantages of financial statement analysis in a company include the fulfillment of the business plan, such as better communication within the company and increased productivity.

The objectives of financial analysis is to generate financial statements that are true statements of the company’s health. Financial documents and statements must be prepared and published on a yearly, quarterly, biannual, and monthly basis.

What is Financial analysis? 

Financial statement analysis covers a company’s operational budget, assets, expenses, liabilities, earnings, and the net worth of liabilities and assets. Financial analysts, accountants, and planners use these statements to enable decision-making expansions, future planning, fundraising, and market launches among others. However, there are bound to be some disadvantages too. Let us explore them.

Financial Analyst course

Advantages of Financial Statement Analysis 

Pattern Detection and forecasting: The importance of financial analysis lies in its ability to reveal earnings per year, sales, and profits accrued. Though sales figures may vary, financial planners will be in a position to find a correlative pattern over a few years of sales data. Take the example of a company that may reveal a trend of sales increases whenever new products are marketed and released. Sales could drop after, let’s say, a year of the product launch. The advantages of financial statement analysis are huge for companies, as it forecasts a market life of about a year, which is useful as it shows sales patterns for product launches, a sales drop after a year, and a need for new products in a year.

Budget Outline in Real-Time: Decision-making for planning the future, budget estimations, corrective actions required for efficient budgeting, and more such decisions are some of the aspects that add to the importance of financial analysis. One of the advantages of financial statement analysis is that it reveals how much you can spend on marketing or product launches, strategizing for marketing campaigns, future expansions, and requirements for funding. 

Disadvantages of Financial Analysis 

Based on the patterns of the market: A big disadvantage of financial statement analysis and use for making strategic decisions is that it is based on figures and data on current market conditions, which may fluctuate. Past performance is a good indicator and motivator. It cannot, however, guarantee fluctuations and future demands. A cautious approach is needed as part of the objectives of financial analysis for the interpretation of financial ratios and statements to prevent excessive risk-taking based purely on forecasts.

Analysis of At-One-Time basis: As the name suggests, the forecast and analysis are applicable at that time only. It does not reveal or compare the past performance or future forecast at one glance. One will need to exercise caution by generating and reporting continuously rather than on a one-time basis. Such extrapolation of data and financial analysis undertaken frequently is crucial to the company’s health and decision-making abilities.

Why study financial analysis?

Consider getting a finance certification so that you will understand the advantages of financial statement analysis better.

Course skills and requirements

A graduation degree or even a Master’s in Finance goes a long way. Add relevant certifications. Those from a non-financial background can also take these courses, as most offer boot camps to understand what is financial analysis.

Course advantages: The course offers a good grasp of basics, concepts, theoretical knowledge, practical skills, and finance certifications that could help enhance your resume and career.

Rising Oil Prices in 2019

Posted on by Imarticus Learning

In the first quarter of 2018, crude oil prices around the globe saw a four-fold increase in the past 4 years. And while experts were still analyzing as to why this happened, the prices suddenly dropped by more than 30 USD in the coming months. With these data in mind, experts and industrialists around the globe are predicting that 2019 will be a tumultuous year for crude oil prices around the globe.
What industry experts are saying?
The major reason, experts around the world are citing for this sudden rise and again downfall of crude oil prices is oversupply and demand worries. But other than this, there are several more power dynamics that are at play here. OPEC’s Viennese waltz in early December is a perfect example for this shifting dynamics where Rusia signed a deal to reduce their produce in the year 2019 and bear the reins with the former global leader, Saudi Arabia. But although this move by Russia and Saudi Arabia was widely accepted and acclaimed on a global stage, President Donald Trump’s tweets, demanding lower oil prices and US manufacturers pumping unprecedented volumes of crude oil into the market is a major threat to all the hard work, Russia and Saudi Arabia have done over the years.
In an interview with the International Energy Agency, the station chief Neil Atkinson said that there are “major uncertainties” and “even more hazardous than usual” predictions for 2019’s crude oil prices.
Another reason that major leaders in the crude oil industry are worried about is geopolitical uncertainties which can seriously set prices off track and even create a shortage in the market.
Global Leaders’ Excerpts
LiveMint which is a business news website reached out to industrialists and people of knowledge across the industry and asked for a comment on the rising oil prices and their opinions on what might be the state of oil prices in 2019. The common answer that all of them had to this issue is that there might be a demand and supply struggle in the coming months of 2019.
Some of the major industry leaders LiveMint interviewed were Ryan Lance, CEO of ConocoPhillips, Greg Sharenow, portfolio manager, Pimco, David Lebovitz, VP and global market strategist, JPMorgan, Neil Atkinson, IEA’s head of oil markets and all of their comments were along the same line.
A significant takeaway from the interviews was the fact that the market is predicted to operate smoothly and volatility like that of 2018 is not expected. Since the price per barrel of oil is at a stable rate as of now, leaders are saying that this is a sign from both the consumers as well as producers perspective.
Conclusion
While the tension keeps on rising around industrialists and manufacturers from around the globe, whose businesses are centred or partly depend on global oil prices, predictions about the market seem to be correct for now. With time, we will realize how this will affect us on a larger scale and thus the best we can right now is wait and watch.

When Applying For a Financial analyst Position What Skills Should You Have?

Posted on by Imarticus Learning

When Applying For a Financial analyst Position, What Skills Should You Have?

Depending on your career plan, resources, specialization choices, and eligibility choose your certification. These have different prerequisites in terms of educational background, experience, and examinations taken to be finally added on to your resume. All of them provide you with a well-defined skill set meant to ensure you are industry ready and have the required skill sets. Let us explore some areas.

Education
 A graduation degree or even a Master’s in Finance goes a long way. Add certifications that are relevant like the CFA from the Chartered Financial Analyst Institute. Those from a non-financial background can do an MBA and take a course on financial analysis as these courses offer boot camps to bring you to speed. Analysts aspiring to work in securities should take their Series 63 and Series 7 exams to be ready for any suitable position.

Non-transferable skills will also need to be developed and aligned with the enterprise’s needs. You must have the following traits.

  1. Interpersonal Communication skills
  2. Ability to solve problems creatively.
  3. Collaborative team skills
  4. Ability to work with ambiguity, pressure, and demands from the startup environment.
  5. Discipline and integrity since you will be working on financial transactions.
  6. A good learner as there may be no prior standards in financial interpretations.Experience
    Most financial analysts gain employment as soon they finish their CFA certification or an MBA from a reputed university. However, other than education and the skills above you will need luck. That’s all. Ignore the payouts and work diligently. In a few years, you will be successful and climb the ladder of success. The payouts get more handsome as time moves on. And the scope is limited solely by you. The industry demands for good Financial Analysts have always been short of supply and have and will never end.Skill sets:
    A Financial analyst has to have a gamut of traits besides training which can be acquired through online refresher courses and extensive research. The importance of continued learning can never be stressed enough. Once you have your skills in place and your certification to validate you are industry-ready, act on taking your skills to the next level.

    The skills of a financial analyst might include:
    • Financial modelling: The modern Financial analysts must be excellent at presenting financial issues in modelling form such as through models like the Sortino Ratio.

    • Financial analysis: This is what the job role demands most from you. You can do accredited online or regular courses to equip yourself. Get certification from CFA under your belt.

    • Data analysis: Digital data today and especially in this field involves Big Data and Deep Learning tools. You will need to update your technical skills to include DevOps, SQL, Python, R etc.

    • Marketing skills: This is one non-transferable skill that you learn from experiential learning. Do a course to stay abreast of the latest technological trends to help reduce your work burden in advisory or forecasting roles.

    • ERP systems: To effectively manage the back-end offices and for automation, you need to be fluent in ERP systems.

    • Strategic thinking: Get creative, and innovative and rely on your own innate skills to develop this invaluable trait you cannot learn from college.

    • Decision-making: The financial analyst services and advise others on making investment decisions. Your acumen needs to be sharp and abilities in decision making clear, precise and data-based when making your presentations.

    • Thought skills: Your head has to be your best ally as you make those calculations and wade through complex equations while landing on your Agile feet at all times. What better way than extensive reading, discipline training and building a hobby to keep you in the developing mode.

    • Attention to detail: Even a tiny mistake on the part of a Financial Analyst will never be tolerated and has a cascading effect on the firm, investors, and profit. No one but you can help yourself! Decide wisely because the Financial Analyst role is definitely not for everyone.

What Skills and Certifications Should You Acquire to Make a Financial Degree More Marketable After Your Graduation?

Posted on by Imarticus Learning

Immediately after graduation, the accounting and finance certifications are validations of your skill set and a big leap towards your career goals. Continued learning is also essential to ensure you stay abreast of the latest best practices, techniques, technological advancements and market trends. Here are some of the best certifications in accounting.

The top accounting certifications

Depending on your career plan, resources, specialization choices, and eligibility here you can choose your certification. These have different prerequisites in terms of educational background, experience, and examinations taken to be finally added on to your resume.

All of them provide you with a well-defined skill set meant to ensure you are industry ready and have the required skill sets.

Take a look at these three corporate accounting certifications oriented to give your resume and career a boost.

• CPA- Certified Public Accountant validated by AICPA
• Chartered Global Management Accountant granted by AICPA and CIMA
• Certified Management Accountant sponsored by IMA.
• A financial analyst course
• The financial analysis prodegree by ey

For a career as a financial analyst, these five certifications are globally recognized for financial and banking services.

• Chartered Financial Analyst by the CFA Institute
• Certified Financial Services Auditor by the CFSA for risk, audit, and fraud management careers
• Certified Internal Auditor validated by IIA for managers and audit experts.
• Certified Fraud Examiner by the ACFE
• Certified Government Auditing Professional accredited by the CGAP
These two certifications are for accountants with IT careers.
• Certified Information Systems Auditor granted by CISA
• Certified Information Technology Professional by AICPA

The importance of certification
Here are some of the obvious benefits:
• Certification theory upgrades and revises your knowledge with updated information
• Certification is an eclectic blend of the necessary theoretical and practical skills required. Certification is a tool to upskill the experienced employees which are today crucial to further growth
• Certification is a validation of your practical skills

Pros:
For the fresh graduates:

  1. Certifications give you a unique standing. Certification validates the point that you are industry ready and have both the conceptual and practical skills required
  2. A certification enhanced resume stands up for itself. HR Managers and screening assessors of your resume treat certification as necessary validation for the job. It adds the professional touch
    For working professionals:
  3. Growth opportunities abound with the scaling up of certification. The process of certification allows you to touch base with new developments and revises what you have not practised on for ages.
  4. Certification empowers you. It validates your skills and tells the world you have the practical skills of an ace in your field.Cons:

     

  5. Certification may not give you a salary advantage. It can keep you in the race and increase possibilities for you.
  6. Certification is no guarantee of a job. It cannot guarantee you have the skills required for the job on hand.
  7. Certification is not the criteria of selection. Skill is when it comes to the final assessment. Performance is the only consideration.

If you have the inclination towards a career in the financial field, then a financial analyst certified course is a good choice for you.

We offer financial analysis courses at our centers in Mumbai, Thane, Pune, Delhi, Ahmedabad.

Also Read: Top 3 Skills For Financial Analyst

What Kind of Background and Training is Needed to Work in Private Equity?

Posted on by Imarticus Learning

Youngsters and fresh graduates with an MBA are passionate about getting PE-Private Equity or VC-venture capital jobs. That’s a good goal to start with. What you really need is to research what these firms do, what your job entails, why you want to make a career in this field, what you can do to achieve your goals and much more. Let us explore the kind of background and training you will need to work in PE.

What does a PE Firm do?
PE firms obtain their funds from HNIs with surplus cash and utilize it to acquire stakes of equity in companies that show promising returns. The main players in PE are institutions, accredited investors, and HNIs who invest large amounts of money over long lock-in periods in return for profit shares in the fund. Duration of a PE can be from 5-7 years. On completion, the PE firm will sell through an IPO its stakes to gain from huge profits.

A courses on financial analysis will help you understand who and where you will be working with and prepare you to perform in the chosen role. Again, research the proposition. Provided below are some details that can help you distill your thoughts.

Responsibilities of a PE analyst
• Manage and monitor investments under management.
• Finalise annual and quarterly returns, financial statements, fund-reviews, and portfolio companies.
• Update, create projection and valuation models
• Involve in the review, study, research of fresh investments, and due-diligence activities.
• Execute target investments research, plan and create collateral fundraising
• Transcribe, research, present industry studies with the aim of detecting future investments.
• Prepare detailed reports and memorandums of information
• Review deals and legal documentation
• Build performance metrics and portfolio analysis
• Interact with peers, senior members of other PE firms to get business intelligence on potential and existing investments
• Diligently complete allotted additional duties and stay updated through financial analysis courses online.
Education

A graduation degree or even a Master’s in Finance goes a long way. Add certifications that are relevant like the CFA from the Chartered Financial Analyst Institute. Those from a non-financial background can do an MBA and take these courses, as most offer boot camps to bring you to speed. Analysts aspiring to work in securities should take their Series 63 and Series 7 exams to be ready for any suitable position.

Non-transferable skills will also need to be developed and aligned with the enterprise’s needs. You must have the following traits.

  • Interpersonal Communication skills
  • Ability to solve problems creatively.
  • Collaborative team skills
  • Ability to work with ambiguity, pressure, and demands from the startup environment.
  • Discipline and integrity since you will be working on financial transactions.
    ExperienceMost financial analysts gain employment as soon they finish their CFA certification or an MBA from a reputed university. However, you other than education and the skills above you will need luck. That’s all.Ignore the payouts and work diligently. In a few years, you will be successful and climb the ladder of success. The payouts get more handsome as time moves on. And the scope is limited solely by you. The industry demands for good Financial Analysts have always been short of the supply and has and will never end.
  • Skill sets:
    A Financial analyst has to have a gamut of traits besides training which can be acquired through online refresher courses and extensive research. The importance of continued learning can never be stressed enough. Once you have your skills in place and your certification to validate you are industry ready, act on taking your skills to the next level.

What is the Easiest Way To Learn How To Analyze Financial Statements?

Posted on by Imarticus Learning

Financial professionals must know and learn financial analysis to be able to analyse the statements of finance of an enterprise effectively. This requires a financial understanding of the basic key regions as financial analysis courses will teach you. They are : 

  1. Financial statements structure.
  2. The market economics of the environment within which the industry operates
  3. The goals and strategies employed and pursued by the firm to stay ahead of the competition. The route to learn financial statements analysis lies in the below plan or strategy.Industry characteristics and economic factors considerations: Porter’s Five Forces or economic attribute analysis will help determine the activities performing in the chain.Ex creation of the product, its manufacture, the distribution channels, retail outlets, price, transportation costs and so on. You now do the value analysis of the chain.

    Company strategies identification: Look at the company’s product, its nature including the product uniqueness, profit margins levels, brand loyalty creation strategy, and cost control measures. Factors considered are the integration of the supply chain, diversity of geographic locations, industry etc.

    Quality of the statements of the organisation’s financial statements assessment: Assess the key statements for relevance within the boundaries of accounting standards. While examining the accounts pay attention to issues of recognition, classification, valuation in the balance sheet accounts to arrive at a proper assessment.

    The main focus area checks if the balance-sheet forms a complete and real picture of the economic position in the firm. In assessing the statement of income, the focal area is to make a true assessment of earning quality to be the representation of economic performance in the organisation.

    Profitability and current risks analysis: In this step, the financial professionals add value to the financial statements and assessment of the firm through the tools of financial statements.

    Common tools for analysis are ratios of the financial statement which are the key to debt management or coverage ratios, liquidity, profitability, asset management, risk management, and market valuation.

    Ask the two questions related to profitability namely regarding how very profitable are operations and how much profit accrues to shareholders of equity. This enables the forecasting of the future health of the firm.

    Preparation of financial statements and forecasts of financial statements:
    Financial professionals will find challenges in making assumptions that are reasonable when speaking of the health and the firm’s future in comparison to the comparative values of growth in the industry.

    They will then study the effects of funding and cash flows on these assumptions. Standardization techniques and approaches like sales percentile values help draw up the pro-forma of the financial statements.

    Firm Valuation:
    Discounted cash flow methodology is most often used from among the many approaches to assessment of firm valuation. Cash flow is assessed and valued in the context of projected and awarded dividends.

    More advanced and technical detailed analysis techniques use available cash-flows to the enterprise or shareholders of equity. Yet another way would be to use the value-added economics method of relative valuation and measures which are accounting-based.

    The final steps:
    On completion of the analysis, valuation and financial statements the integrity of testing is called upon. Are these figures real and true pictures of the firm’s finances and positions?

    Many representations are fudged, enhanced and irregularly reported making the final test critical and valuable to the forecasting and financial data analysis. The financial analyst needs to be an ace at recognizing manipulation, detecting frauds, and correcting the statements.