Financial analysis of companies, Discounted Cash Flow Analysis, Financial Modeling of companies, reviewing debt and equity securities, valuation of intellectual property, business valuations, intangible asset valuations, and option valuations are just some of the tasks that financial valuation analysts work on across multiple industries.
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About Financial Valuation
In layman’s words, a valuation analyst examines an asset, a business, equities, real estate, commodity, fixed income security, and so on, and then determines its approximate worth. They’ll estimate the value using a variety of approaches because one strategy won’t work for every asset.
Roles and responsibilities of a Financial Valuation Analyst
Notify yourself with all the necessary details before taking a step forward for the examination. And one of the important details is to know about the tasks of a particular practitioner. Mentioned below are the duties of a Certified Financial Valuation Analyst.
- To carry out financial forecasting, reporting and operational metrics tracking
- To Analyze financial data and develop financial models for decision process
- To report on financial performance and prepare for regular leadership reviews
- To Review and analyze past results, perform variance analysis, identify trends, make recommendations for improvement.
- To Work closely with the accounting team to ensure accurate financial reporting
- To Undertake assessment of financial performance by comparing and analyzing actual results with plans and forecasts.
- To guide the cost analysis process by creating and enforcing policies and procedures
- To provide analysis of trends and forecasts and recommend actions for increase in sales and optimization
- To Recommend actions by analyzing and interpreting data and making comparative analyses; study proposed changes in methods and materials
- To recognize and drive process improvements, including the creation of standard and ad-hoc reports, tools, and excel Dashboards
Eligibility
The most fundamental need for becoming a value analyst is a bachelor’s degree in finance or accounting. Even if this is the minimum need for a job in value analysis, you must have a strong understanding of financial modelling and valuation. A master’s degree is also advantageous. Going for CFA while working as a Junior Associate is a fantastic choice since you can study while working (actually, to pass CFA, you need to have 4 years of full-time employment in the financial field). You would have a significant edge if you had a CFA degree and 4-5 years of experience.
Career Prospects
Investment banking – Investment banking is often regarded as the birthplace of financial modelling. For mergers and acquisitions (M&A), capital raising (debt, equity, Initial Public Offerings, follow-on offerings, and other mandates), and advising mandates, investment bankers construct Excel models on a regular basis. Large public businesses, private equity firms, private corporations, institutes, and governments from all over the world are among their clientele. You’ll spend the majority of your time as an investment banking analyst or associate creating sophisticated models in Excel.
Equity research – Analysts and colleagues in equity research spend a lot of time in Excel. They are frequently occupied with developing financial models, doing corporate analyses, and conducting industry research. All of this effort culminates in a report that is provided to the bank’s clients, who use it to determine whether or not to invest in a public security. Equity research experts naturally spend a lot of time in Excel building models since they spend so much time evaluating firms. This is another another professional option that needs extensive Excel knowledge.
Financial planning and analysis (FP&A) – Financial planning and analysis is a department that almost every big functioning company has (FP&A). The group is in charge of projecting the company’s performance, comparing it to actual outcomes, and keeping track of the company’s cash flow. FP&A analysts, managers, and directors must undertake complicated financial modelling and analysis to guarantee that the firm is well-funded and able to plan for the future. They also emphasize the significance of analyzing and assessing performance.
Private equity – Because they acquire firms and keep them for a long time, private equity (PE) is referred to as being on the “buy side” (as opposed to investment banking, which is on the “sell side”). For a leveraged buyout (LBO), which necessitates extensive capital structure modelling, private equity experts typically create spreadsheets. The idea is to employ as much debt (leverage) as feasible to boost the transaction’s levered internal rate of return (IRR). While private equity employment are few, individuals who work in the business devote a significant amount of time to financial modelling.
Salary Insights
Many people select this position because of the opportunities for advancement and good pay. You may expect to earn between $60,000 and $90,000 per year as a junior or senior associate (the amount is inclusive of the bonus). A manager’s salary ranges from $90,000 to $150,000 per year (the amount is inclusive of the bonus). Your annual salary as a vice president would range from $150,000 to $300,000 (with bonuses). If you opt to continue on your current route, you will become a corporate partner and earn between $300,000 and $1 million each year (including bonus).
Scope
The professional profile of a value analyst is 80 percent science and 20 percent art. You’d be doing a lot of financial modelling, valuation procedures, and other things. At the same time, in order to reach a conclusion, you must make some assumptions. That is why you must continuously study, comprehend the industry, keep up with current events, and implement what you have learned. Overall, the valuation analyst job is a fantastic opportunity for people who enjoy financial modelling.
Resources for Financial Valuation
Before you can become an expert in desired areas, you must first build a solid base. Before you can move on to practical teaching, you’ll need to have the right applied skills. To gain better understanding of the domain, you can use the following tools:
- Firstly, Online Tutorials for learning Financial Valuation
- Also, Certification Courses from verified sources such as Vskills, Coursera, Udemy and so on.
- In addition, Online communities
- Moreover, Blogs and study material from experts in this field and many more.
Here are some examples of how you can improve your abilities:
- Freelancing
- Internships
- Apprenticeship programs
The above steps will help you to get this domain started. It’s a long way to go, however. You can take an advanced course to reach a new level of skills.
Some resources offered by Vskills
Vskills offer Financial Valuation Analyst certification for all those interested in working in this field or in advancing their career. This certification course covers the following objectives –
- Investing & Valuation
- Financial Statements & How They Are Used In Valuation
- Cash and Accrual Accounting, and Discounted Cash Flow Valuation
- Pricing Book Values & Earnings
- Business Activities and Financial Statements
- Analysis of The Statement of Shareholder’s Equity
- Analysis of The Balance Sheet and Income Statement
- Analysis of The Cash Flow Statement
- Analysis of Profitability
- Analysis of Growth and Sustainable Earnings
- Value of Operations
- Forecasting, Valuation, And Business Strategy Analysis
- Creating Accounting Value and Economic Value
- Analysis of The Quality of Financial Statements
- Analysis of Equity Risk and The Cost of Capital
- Analysis of Credit Risk
Vskills also offers free practice tests and online tutorials to supplement the learning process. You can check them by clicking on the following links –
Discover the career opportunities and other prospects of Career in Financial Valuation. Hurry up and start preparing now with Vskills.in!
