FIN 320 Project One Financial Analyst Job Aid PDF

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First assignment for FIN 320, Financial Analyst Job Aid....

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FIN 320 Project One Financial Analyst Job Aid The goal of this job aid is to provide an overview of the day-to-day responsibilities of a financial analyst and to describe the role financial management plays in an organization. Financial Responsibilities       

Responsible for financial planning, analysis and projection for companies and corporations. Forecast future revenues and expenditures to establish cost structures and determine capital budgeting for projects. Work with CFOs and other team members to set company investment direction and policies. Analyzes past results, preforms variance analyses, identifies trends, and recommends improvements (Lynch, 2020). Performs market research, data mining, and business intelligence. Develops automated reporting/forecasting tools to increase productivity. Analyzes data to create financial models to support financial decisions (Finance Institute, 2021).

Financial Management Decisions One of the most important responsibilities undertaken by businesses is financial management. Financial managers must consider potential consequences of management decisions on profits, cash flows, and the company’s financial condition. Every aspect of a business influences a company’s financial performance. Financial analysts work to evaluate and control these influences (Woodruff, 2019). Accounting Principles Generally Accepted Accounting Principles (GAAP) are procedures, standards, and principles that businesses follow to prepare their financial statements. These principles help investors, and third parties analyze company accounts and other financial information. Basic principles used are cost principle, time period assumption, monetary unit assumption, and going concern principle. Without these principles and information generated from them, companies would have no idea what direction to take their business to ensure financial growth (Financialized, 2021). Financial Statements There are many financial statements utilized to help businesses make decisions. Some of the most used statements are balance sheets, income statements, and cash flow statements. Balance sheets are a summary of a company’s financial balances and depicts a picture of the strength of the company. Income statements are also known as profit and loss statements. These reflect a company’s revenue and expenses during a particular time period (Admin, 2018). Its purpose is to show how a company has performed through listing sales, expenses and resulting profit and loss. Cash flow statements show inflows and outflows of cash during a finite period of time. These statements are important indicators of whether a company can generate sufficient revenue to maintain a healthy business.

Financial Terminology Financial statement  Definition: Written records that convey the business activities and the financial performance of a company (Murphy, 2020).  How this is used: Data from financial statements are used to analyze the performance of a company and make predictions about its future direction. Liquidity  Definition: Refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price (Hayes, 2021).  How this is used: Financial analysts look at a firm’s ability to use liquid assets to cover their short-term obligations. Working capital  Definition: The difference between a company’s current assets and inventories of raw materials and finished goods, and its current liabilities (Fernando, 2021).  How this is used: Working capital is necessary for a company to remain solvent. Businesses cannot rely on accounting profits to pay its bills and must rely on their working capital to fulfill their liabilities. Diversification  Definition: A risk management strategy that mixes a wide variety of investments within a portfolio (Segal, 2020).  How this is used: Financial analysts can diversify portfolios to leverage their risk. Aggressive investors can split their investments between multiple funds to limit risk and increase potential reward. Time value of money  Definition: A concept that money you have now is worth more than the identical sum in the future due to its potential earning capacity (Fernando, 2021).  How this is used: Time value of money is an integral part of financial planning and risk management activities. It is one of the most popular and influential methods for valuing investment opportunities.

References

Admin, A. L. T. W. P. (Ed.). (2018, November 7). How Do Financial Statements Help Your Decision Making? Altima Business Solutions. http://www.altimabusinesssolutions.com/index.php/2016/08/29/financial-statementsdecision-making/. Fernando, J. (2021, March 10). Time Value of Money (TVM) Definition. Investopedia. https://www.investopedia.com/terms/t/timevalueofmoney.asp. Fernando, J. (2021, March 10). Working Capital (NWC). Investopedia.

https://www.investopedia.com/terms/w/workingcapital.asp. Finance Institute, C. (Ed.). (2021, March 10). Financial Analyst Job Description - Skills, Education & Experience. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/careers/jobs/financial-analyst-jobdescription/. Financialized (Ed.). (2021). Accounting Standards Help Assess Financial Performance. Accounting Standards Help Assess Financial Performance - Financialized.com. http://www.financialized.com/Banking/accounting-standards-help-assess-financialperformance. Hayes, A. (2021, March 16). Liquidity. Investopedia. https://www.investopedia.com/terms/l/liquidity.asp. Lynch, P. (Ed.). (2020). Financial Analyst Job Description: Salary & Requirements. Parker + Lynch. https://www.parkerlynch.com/job-seekers/job-descriptions/financialanalyst/#:~:text=Financial%20analysts%20are%20responsible%20for,determine %20capital%20budgeting%20for%20projects. Murphy, C. B. (2020, October 27). How to Interpret Financial Statements. Investopedia. https://www.investopedia.com/terms/f/financial-statements.asp. Segal, T. (2020, September 16). Diversification. Investopedia. https://www.investopedia.com/terms/d/diversification.asp. Woodruff, J. (2019, January 28). Why Is Financial Management So Important in Business? Small Business - Chron.com. https://smallbusiness.chron.com/financial-managementimportant-business-57073.html....