Corporate Financial Analyst Job Description
The field of finance offers myriad opportunities for analysis. Indeed, working in finance without critical analysis of what you're doing will ensure trouble for yourself and your employer. However, the term "financial analyst" accurately suggests a role in which analysis takes a more frequent part.
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Financial Analysts
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A number of programs will train individuals as "analysts." Some, such as the Financial Analyst Program of the University of Texas, are specializations within undergraduate programs. Others, like the more widely recognized Charter Financial Analyst program, are advanced credentials similar to an MBA. This diversity results from the fact that the use of the word "analyst" is not tightly controlled by regulation or law. However, the tasks faced by different types of analysts remain similar.
Investment
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According to Fundamentals of Corporate Finance (Richard A. Brealey, Stewart C. Myers, Alan J. Marcus), a firm considering a project faces two main types of decisions: investment and financing. The investment decision is based on the likely success of the endeavor and the necessary steps to achieve that success. Keen analysis plays a vital role to this decision. Analysts must consider legal issues, demand for the product, logistics, availability of labor and the cost of inputs. Past and present assessments of these many factors do not prove sufficient. Analysts must also consider that some of these factors may change and must predict (as well as they can) likely changes and how they would affect operations.
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Capitalization
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The second type of decision, financing, involves the accumulation of sufficient capital to begin the project. Large corporations embark on major projects that may cost many millions of dollars and take years to break even. Such projects may eventually prove quite lucrative, but they will require financing. The analyst specializing in financing is familiar with the many tools available for raising capital. Companies may negotiate loans with banks, with or without collateral. The analyst may also work with investment banks to issue bonds (which are debt instruments through which investors supply capital to the company, which it must pay back with interest) or common stock (which provides money for the company in exchange for partial ownership and control of the interest). The analyst may also consult with venture capitalists---wealthy individual investors who fund start-ups.
Managers
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Analysts differ in responsibility (and often in training) from managers. Managers' roles tend to be more operational---that is, managers make the regular decisions necessary for the continued operation of an ongoing interest. On the other hand, analysts determine the wisdom of a single (admittedly complex) decision. As such, the skills most useful for each are also somewhat different. Analysis places a higher value on statistics and logical problem solving. Managers will find that people skills, communication and maintaining relationships take priority. Of course, these are generalizations; analysts sometimes become managers, and vice versa.
Compensation
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The compensation for analysts varies widely. Many senior personnel in publicly held companies are rewarded with stock options or other equity-based compensation, so the compensation of these employees hinges on the company's performance. However, some rough estimates are possible. Salaries for corporate financial analysts at medium-size companies averaged $38,000 to $47,000 per year as of 2005, while chief financial officers (a role nearly always filled by former analysts or financial managers) may make from $230,000 to $295,000 per year. Obviously, small companies cannot offer the best wages, and world leaders in major industries pay a considerable premium for top talent.
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References
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