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What is Financial Analytics and Why is it Important?

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20th May, 2022
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What is Financial Analytics and Why is it Important?

The foundation of any business relies on its financial structure. Financial analytics offers valuable insights to keep this base strong through financial data.

Finance is the driving force of businesses. Whether it’s a company dealing with financial services or a non-finance, small-scaled brand heading towards growth, the role of financial analytics is significant in making a sizeable difference to its course of action. Financial analytics provides in-depth knowledge of the current market and strives to make value out of retrieved data to improve a company’s overall performance further. 

Today, financial analytics oversees every business organ, how it works with the allotted financial aid, the additional help it requires, and what strategies can be created to make a profitable balance between consumption and creation. Hence, a financial analysts’ role is to make critical business decisions related to finance. Therefore, choosing the right candidate for this role is significant for brands to ensure growth within a specific time.

But what exactly does financial analytics mean to a business, and how can we leverage its competence to reach potential opportunities and eventual expansion? Let’s find out!

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What is Financial Analytics?

Financial analytics is a field dealing with the financial assets of a company. Analysts assess financial data and use the retrieved findings to create reports and models for organizations. These reports offer meaningful insights further translated into valuable decisions. Investment decisions for companies, assessing profitability, managing cash flow in the organization, predicting financial risks, and preparing a defense against high risks are some of the crucial duties of financial analysts. 

Digitization has led to a flow of enormous amounts of data in an organization. Financial analysts with proficient knowledge of volatile markets and technical skills can use structured data to create winning strategies.

Types of Financial Analytics

Financial analytics is critical for any company to stay relevant in the competitive market with the right strategies to analyze and improve the company’s past, present, and future position. 

Financial analysts work with the following analytics to envision growth in organizations:

  • Predictive sales analytics uses correlation and past trends to make valuable predictions.
  • Product profitability analytics assess individual product profitability rather than the business as a whole to ensure precision and the right profitability insights.
  • Client profitability analytics analyzes each customer group to understand which ones contribute to the business by bringing profit and which fail to do so.
  • Cash flow analytics is a significant part of financial analytics, assessing the real-time cash flow of a business by deploying real-time indicators with tools like regression analysis, managing current cash management, and future flow.
  • Shareholder value analytics works with revenue and profit analytics to tally the returns it offers to the shareholders investing in the company and the value it provides.
  • Value-driven analytics assess the value ‘levers’ or the key points, sure to bring profitable results. These key points are intricately designed after comprehending their value to current and future goals. 

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Significance of Financial Analytics

Just like a map made out of the prior experience and possible outcomes is better to navigate unexplored territories, financial analytics guides how to make financial decisions in any company. 

Businesses cannot simply run on intuition. Financial analytics aim to leverage credible insights through advanced technical tools. With creative start-ups taking space in the market, surviving through the competition is nearly impossible. The best way to stay vigilant with your place in the market is by using inherited data.

Financial analysis grants companies the gift of insightful statistics, narrating historical trends and predicting future ones to keep up with volatile markets. Financial analytics regulate the cash flow to support company goals while maintaining its stability rather than limiting itself to an organization’s accounting, taxing, and investing domain. In addition, a financial analyst requires both technical and business background skills.

Financial Analytics Market

Today, financial analytics is experiencing a boom among young minds opting to have it as their career. Based on reports, the financial analytics market was valued at USD 6.32 billion in 2020 and is more than likely to reach USD 11.02 billion by 2026. These trends speak for its growing demand and popularity as a reliable career opportunity. 

A career in Financial Analytics

Financial analytics is one of the most sought-after, in-demand career options. While it has no strict educational requirements, candidates must have the necessary qualifications to get started:

  • Bachelor’s degree in a relevant field is necessary for getting started in the financial analytics domain. A major in finance, economics, statistics, accounting, or even engineering is essential.
  • In addition to educational qualifications, problem-solving skills, analytical thinking, communication skills, leadership process, and technical skills prove valuable additions to the role.
  • Not mandatory, but a master’s degree in a related discipline can improve your chances of getting hired. The degree encourages learners to explore their most vital points and look for relevant roles while looking for jobs.
  • Try your hand at interning as a financial analyst for companies. A candidate with experience is more valuable than one with a hoard of degrees. Real-life working experience can simplify many things, even those not taught in college. In addition, experience helps improve your approach towards subjects and skillsets simultaneously.
  • Additional certifications to improve a resume can never go wrong. Pursue certified courses focused on your area of specialization. Added credentials show your willingness to learn and explore. 

Our learners also read: Business Analytics Free Online Courses

Strengthen Financial Analytics Career

Are you looking for a certified financial data analytics certification course to further strengthen your resume? If yes, upGrad’s Business Analytics Certification Program is a good fit for you.

The 3-month long, best-selling program works with topics like Exploratory Data Analysis, Predictive Analytics, and Business Problem Solving, preparing learners to achieve wonders in the data analytics field. The course is created under experienced faculty and industry experts working together to bring relevant topics to learners through live lessons, case studies, and real-life projects.

With an expansive learner base of 40,000+ students spread across 85+ nations, upGrad delivers valuable learning experiences, helping learners perform well after completing the course. Industry mentor support, career guidance, peer to peer networking are some of the added benefits learners reap under the course duration.



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Frequently Asked Questions (FAQs)

1Q1: What do you learn in Financial Analytics?

Answer: The study of financial analytics acquaints a person with financial strategies, helping them bring out value from given data and help people run a company. Financial analytics helps evaluate any company’s data, identifies business concerns and opportunities, and encourages the head to make well-informed decisions.

2Q2: How does financial analytics affect the course of action in a company?

Answer: Financial analytics deals with planning, shaping, and managing the financial strategies of a company. Financial analytics helps absorb the current assets and tools and prepares well-informed decisions further to improve the profitability and value of the company. The role of a financial analyst enables organizations to reap financial benefits in the long run if a skillful individual holds the position.

3Q3: What are the leading financial analytics tools for analysts?

Answer: Financial analysis tools are software helping analysts create detailed reports, relevant models, and presentations for the organization or clients. Among many such tools, the leading and most important ones are Excel, Word, and Powerpoint. These tools offer immense help to present analytical data in consumable forms that an organization’s people can easily understand.

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