Skilled professionals are preferred by every employer in each industry, be it finance, healthcare, technology, manufacturing, or marketing. The key skills for a financial analyst are also important. It helps professionals stand out to their employers and showcase the skills needed to drive results and innovation.
In this blog, we are going to tap into these skills required for a financial analyst in detail. Along with their core responsibilities, and types of job roles available in this dynamic career path.
Table of Contents:
What is a Financial Analyst? An Overview
A financial analyst is a professional who evaluates financial data. He is responsible for studying market trends and recommending companies or individuals to make smart financial decisions. Nowadays, the business world is driven by data and outcomes. Financial analysts act as interpreters of numbers, transforming complex datasets into strategic insights.
As a result, these professionals work across various industries. These include investment banking, corporate finance, consulting firms, mutual funds, insurance companies, and even government agencies. Their core goal remains the same, which is to guide stakeholders in making choices that lead to financial growth and sustainability.
What’s more to financial analysts is that they do not just look at what happened. They focus on what will or could happen. They use historical data, current market conditions, and predictive modelling to advise businesses on budgeting, investments, and long-term planning.
What is a financial analyst? In simple terms, businesses are ships navigated by the financial analysts who navigate, read maps, track storms, and chart the most profitable path forward.
What do Financial Analysts do?
Actually, financial analysts help businesses and individuals make informed decisions. Whether you are working in a multinational company or a boutique investment firm, strategic planning and money management are your core responsibilities. Here, we bring to you a clear breakdown of actually what does a financial analyst do.
- Analyse Financial Statements
Financial analysts assess the overall performance of the organisation by interpreting income statements, balance sheets, and cash flow reports. For example, a corporate finance analyst identifies rising costs in raw materials and alerts the management to renegotiate contracts.
- Build Financial Models
Financial analysts create models to forecast revenue, profits, or cost scenarios to weigh future outcomes of the company. As an investment analyst, you will build a discounted cash flow (DCF) model to determine if a company is undervalued in the stock market.
- Support Budgeting and Forecasting
Financial analysts assist in setting budgets and predicting financial performance based on internal and external factors. For example, a corporate analyst might forecast next quarter’s sales by combining past sales trends with upcoming product launches.
- Conduct Market & Industry Research
Financial analysts monitor industry benchmarks, economic shifts, and activities of the competitors to provide valuable context to financial data. If an analyst in the auto sector, then he may study how rising fuel prices could impact demand for hybrid vehicles.
- Advise on Strategic and Investment Decisions
Financial analysts guide management on expansion, mergers, cost control, or asset purchases. So, a financial analyst suggests delaying a capital investment after identifying cash flow constraints.
- Prepare Reports and Presentations
Financial analysts turn data into insights using dashboards, reports, or visual presentations for senior stakeholders. An analyst may present a risk analysis report for launching a new product in an international market.
To understand better, let us have a brief look at the table showcasing the comparison between corporate vs investment financial analysts. Financial analyst is a broad job title. Under this umbrella, there are multiple specialisations, and the skills needed to be a financial analyst may vary. The two most common types of financial analysts are Corporate Financial Analyst and Investment Analyst.
Aspect | Corporate Financial Analyst | Investment Analyst |
| Primary Focus | Internal budgeting, forecasting, and performance tracking | Evaluating investment opportunities (stocks, bonds, assets) |
| Work Environment | Corporations, MNCs, start-ups, and manufacturing firms | Investment banks, hedge funds, and asset management companies |
| Typical Tools Used | Excel, Power BI, ERP systems | Excel, Bloomberg Terminal, Python, R |
| Key Output | Budgets, variance reports, cost-benefit analyses | Valuation models, equity research reports |
| Stakeholders Served | Internal management, CFOs, and business units | Portfolio managers, clients, and senior investors |
| Example Task | Forecast next quarter’s revenue for a product line | Recommend a stock for inclusion in a client’s portfolio |
Top Skills Required for a Financial Analyst
It is a profession where analysts are expected to not just work with numbers but also interpret and communicate them to the decision makers. This role demands a unique combination of financial analysis skills, technical expertise, business understanding, and communication skills.
Whether you are aiming for a corporate role or an investment-based position, the right skill set can set you apart from your peers. Here is a detailed look at the top skills required for financial analyst.
- Financial Analysis & Accounting Knowledge
It is one of the very basic skills required for financial analyst to understand financial statements, ratios, and accounting principles. You must be able to read balance sheets, interpret cash flow reports, and evaluate profitability. Let us take an example. When assessing a company’s quarterly performance, you need to identify which expense categories impacted margins the most.
- Excel & Spreadsheet Modelling
You have to be proficient in Excel as its use ranges from creating financial models to performing sensitivity analysis. So, Excel remains your go-to tool. Exemplifying it, you might build a model to project sales under best-case, average, and worst-case market scenarios.
- Critical Thinking & Problem Solving
Financial analysts must interpret data, assess risks, and offer logical solutions. Even if you are given incomplete information, actionable conclusions are expected to be reached. For example, while assessing the viability of launching a new product in a market, you have to depend on the limited past data.
- Communication & Presentation Skills
One of the top skills for a financial analyst is finding insights, but it is not limited to that. You must present them clearly. And analysts regularly prepare reports, dashboards, or board-level presentations. After identifying budget inefficiencies, you can be asked to convince department heads of your findings and suggest alternatives.
- Tools & Tech: Power BI, Tableau, SQL, Python
As businesses become more data-driven, your knowledge of analytical tools and basic coding can set you apart. SQL helps extract data; Python and Power BI help you visualise and automate it. So, these are the crucial skills required for financial analyst. Take an example, as an analyst, you might use SQL to pull sales data from a database, then use Power BI to build an interactive dashboard.
- Business Acumen & Industry Knowledge
Realising how companies work and how markets tend to behave is among the financial analysis skills that help analysts to arrive at a decision. For instance, a telecom analyst may consider regulatory changes in forecasting customer acquisition costs for the following year.
So, understanding how businesses operate and how markets behave helps analysts make better decisions. These skills for a financial analyst will definitely help you stand out in interviews, perform well on the job, and grow faster in your financial analyst career.
Different Types of Financial Analysts
As we have already hinted above, financial analysts is a broader term. It covers a wide range of roles having their own focus area, skill set, and industry relevance.
Whether you are passionate about investments, strategy, risk, or data, there is a specialised path for you. Let us explore that path out of the below-mentioned most common types of financial analysts,
- Corporate Financial Analyst
Corporate financial analysts work within companies to support budgeting, forecasting, and internal financial planning. Like tracking quarterly sales trends to help the CFO allocate budgets for the next financial year.
- Investment Analyst
Investment analysts are mostly found working in investment banks, hedge funds, or asset management firms. These analysts evaluate external companies and their assets for potential investment.
- Credit Analyst
Credit analysts are needed to evaluate the creditworthiness of individuals, businesses, or securities. They are highly sought by Banks, credit rating agencies, and NBFCs. They also review the borrower’s financial history, cash flow, and market position before approving a business loan.
- Risk Analyst
As the name of the designation suggests, the risk analysts focus on identifying potential financial risks and suggest ways to mitigate them. The risk may include market volatility, operational threats, or interest rate fluctuations, and their impact on a multinational company’s revenue.
- FP&A Analyst (Financial Planning & Analysis)
An FP&A analyst is a specialised corporate role. They help shape the financial strategy of an organisation through in-depth analysis, planning, and budgeting. They may tend to prepare a 5-year financial forecast to support a company’s long-term growth strategy.
Here is a table for your key takeaways of different types of financial analysts in brief.
Type of Analyst | Common Employers | Key Focus Area |
| Corporate Financial Analyst | Corporations, MNCs, Start-ups | Internal financial planning |
| Investment Analyst | Investment Banks, Hedge Funds, AMCs | Market research & financial modelling |
| Credit Analyst | Banks, NBFCs, Credit Rating Agencies | Creditworthiness and loan decisions |
| Risk Analyst | Insurance Firms, Banks, Large Corporations | Market, credit, and operational risk |
| FP&A Analyst | Large Corporations, Start-ups | Strategic financial planning |
| Equity Research Analyst | Sell-side/Buy-side Firms, Brokerage Houses | Equity valuation & market trends |
Conclusion
Financial analysts enable decisions that bridge data and strategy. From managing internal budgets to evaluating investment opportunities or assessing risk. Their role is central to how modern businesses grow and adapt.
Whether you see yourself working in corporate finance, investment analysis, or credit evaluation, one thing is clear that building the right skill set is very important. The skills needed to be a financial analyst include soft as well as technical skills.
So, start by strengthening your foundation in finance, data analysis, and business understanding. And remember, with the right guidance and consistent learning, this dynamic career can take you places.
FAQ’s
Is SQL used in FP&A?
Yes, SQL is used in FP&A (Financial Planning and Analysis) for budgeting, forecasting, and financial modelling. It's a crucial tool to extract, manipulate, and analyse large datasets.
Is being a Financial Analyst hard?
No, being a financial analyst hard, is not a correct statement. It is a rewarding career, but includes high stress levels, long working hours, and continuous learning and adaptation to market changes.
Which degree is best for a Financial Analyst?
A bachelor's degree in Finance, Accounting, Economics, or Business Administration is generally considered the best starting point for a career as a financial analyst.
What is the role of Financial Analysts?
The role of Financial Analysts is to guide businesses and individuals in making sound financial decisions.
