The Role Of The Financial Analysts In The Financial Sector - Essay Example

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The financial analyst career is one of the most coveted careers in the financial service industry. The paper "The Role Of The Financial Analysts In The Financial Sector" discusses the purpose, summary and some of the essential functions of a financial analyst…
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The Role Of The Financial Analysts In The Financial Sector
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The Role Of The Financial Analysts In The Financial Sector
The financial analyst career is one of the most coveted careers in the financial service industry. The modern business world requires for the investors to make right investment decisions and reduce the risks of making losses. Therefore, the financial analysts have become a critical lot in the financial sector. People are continuously engaging the financial analysts as individuals or companies in order to make the correct investment decisions. Their services are welcome for all forms of businesses including small and medium enterprises and the international companies. They communicate the financial risks involved in the business investments. This paper will discuss the purpose, summary and some of the essential functions of a financial analyst.
Purpose of the Job
The financial analyst is an essential profession in the enhancement of financial management in the financial sectors. The financial service industry is competitive in the market and tough to break. Therefore, acquiring the services of a financial analyst can enhance the ability of an investor to venture into the sector with limited risk. The financial analyst niche is, therefore, a core unit in the financial sector as it streamlines the financial performance of an organization. It gives the investor the pros and cons of undertaking or failing to undertake certain decisions in their operations. Therefore, it serves to enlighten the investors on the most plausible and feasible decisions in their businesses.
Summary of the Job
The financial analyst job is responsible for maintaining order and smooth running of a financial service organization. Rather that venturing into an unknown sector for investors, the financial analysts create awareness of the sector to the investors. They research macroeconomic and microeconomic conditions of a financial institution in order to aid in decision making. The fundamentals of the company require to be known for them to provide recommendations for the business, sector and the industry. They recommend the course of action to their bosses such as whether to sell or buy stocks from a company based on its current financial strength. The financial analyst also makes projections of performance by financial institutions hence making it easy to invest in profitable companies. Therefore, the analyst must always be aware of the current developments in the sector of their specialization. This aids in preparing the financial models for predicting the economic conditions in the future for any variables
Functions of the Job
The functions of the financial analysts are to make financial recommendations on feasible investments for their clients. Therefore, they obtain information of financial institutions from public records studies and company filings. The analysts use fundamental analysis principles and tactical market evaluation to determine the effectiveness of the market environment. Financial analysts with lending institutions’ clients perform analysis of their balance sheets and examine the financial audit reports in order to assess the financial stability of the institution. It is done through the evaluation of the sales, expenses, costs, tax rates and commodity prices of the company. If the risks are high, the analysts advise their clients on the next best option to take. The analysts also analyze the company’s financial data, spot the trend of the company and make its forecast. This gives a sense of direction to the investors
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