What the life of an analyst is really like
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Written byTim Vipond
What Does a Financial Analyst Do? A Day in the Life
A financial analyst is responsible for a wide range of activities including gathering data, organizing information, analyzing historical results, making forecasts and projections, making recommendations, and generating Excel models, presentations, and reports. This guide will provide a detailed breakdown of a day in the life of a financial analyst, and answer the question, what does a financial analyst do?
To learn more about the real day-to-day life of an analyst, check out CFI’s Online Financial Analyst Courses, as they provide complete training on all of the most important skills that are required for the job.
List of What a Financial Analyst Does
Analysts have many duties and responsibilities, depending on the organization they work for, the industry they are in, and their seniority. Below is a list of the most common things they do:
#1 Gather data and information
The work of a financial analyst starts with gathering data and information about whatever they need to analyze. Examples include historical financial reports, accounting data from the general ledger, stock price information, statistics and macroeconomic data, industry research, and just about any other type of quantitativedata. The information will be gathered from sources such as the company’s internal databases, third-party providers such as Bloomberg or Capital IQ, and government agencies such as the Securities and Exchange Commission (SEC).
#2 Organize information
Once the data is gathered it’s typically entered into Excel or some other type of database. Once inputted, the next task is to organize it, clean it up, and get it into a format it can be made sense of. This typically means sorting the numbers by data, or by category, adding formulas and functions to make sure it’s dynamic, and using consistent formatting styles so that it’s easy to read and understand. See more Excel formatting tips.
#3 Analyze financial results
With the data all cleaned up and organized in Excel, it’s time for the financial analyst to start analyzing past information and historical results. This typically includes looking at ratios and metrics like gross margin, net margin, fixed vs. variable costs, year-over-year (YoY) growth rates, return on equity (ROE), return on assets (ROA), debt/equity ratio, earnings per share (EPS), and many others. The analyst will look for trends and benchmarkthe performance against other companies in the same industry. When asking what does a financial analyst do, this is one of the biggest components!
#4 Make forecasts and projections
Now that historical information has been analyzed, it’s time to make projects and forecasts about how the company will perform in the future. There is both an art and a science to predict how a company will perform, and many assumptions and even leaps of faith have to be made. Common forecasting methods include regression analysis, year-over-year growth rates, as well as bottom-up and top-down approaches. Learn more in CFI’s Budgeting and Forecasting Course.
#5 Develop recommendations
A good financial analyst is not only good with numbers but actually generates insights and recommendations on how to improve the operations of a business. Examples of helpful recommendations and insights include ways to cut costs, opportunities to grow revenue, ways to increase market share, operational efficiencies, customer satisfaction, and much more. This is what truly separates a world-class financial analyst from the rest. These recommendations will be presented to the CEO, the CFO, other executives, and/or the board of directors.
#6 Build Excel models
For analysts working in investment banking, equity research, corporate development, financial planning & analysis (FP&A), and other areas of corporate finance, financial modeling will be a big part of the job. These models typically start by linking the 3 financial statements and then layering on more advanced types of financial models such as discounted cash flow analysis (DCF models), internal planning models, and more arcane models such as LBO models and M&A models.
Learn more about these in CFI’s Financial Modeling Courses.
Image from CFI’s Financial Analyst Courses.
#7 Make presentations
When someoneasks,what does a financial analyst do, the answer will always include something to do with making presentations (often in PowerPoint). The analysis that’s completed in Excel then has to be turned into charts and graphs, which can then be inserted into pitchbooks and management presentations. Learn more in CFI’s PowerPoint Presentations Course.
#8 Generate reports
Internal reports and dashboards are a part of the daily life of an analyst. Whether it’s presenting key performance indicators (KPIs) or tracking actual vs. budgeted results, it’s imperative to the company or the client that information be clearly presented, timely, easy to understand, accurate, and insightful. To learn more, check out CFI’s Dashboards Course.
Types of Financial Analysts
Below is a list of the most common types of financial analysts:
- Investment banking analyst
- Equity research analyst
- Treasury analyst
- Private equity analyst
- Corporate development analyst
A Day in the Life of a Financial Analyst
Below is an example of a day in the life of a financial analyst working at a corporation on the FP&A team:
7:00 am– At home, check phone and email for any important messages before getting ready for work and commuting to the office.
8:30 am – Arrive at the office, respond to any urgent emails, follow-up on any outstanding items from the previous day.
9:00 am – Finance team meeting to discuss changes that need to be made to the Q4-2018 budget model, including updates to assumptions and changes to forecast.
10:00 am – Work on the budget model and make all updates and changes that were discussed in the meeting.
12:30 pm – Pick up lunch from a nearby deli and eat back at the desk while catching up on financial news and videos on Bloomberg.com.
1:30 pm – Start working on the updated version of the Q4 board presentation including updated PPT slides and graphs in Excel.
4:30 pm – Circle up with the manager and review changes to the budget model as well as the board presentation.
5:30 pm – Tend to some personal errands and respond to emails from friends.
6:00 pm – Finish up changes from the 4:30 pm meeting with the manager and finalize the Excel model and PPT presentation.
7:00 pm – Head out of the office and meet some friends for dinner or head home.
Note: a day in the life can vary significantly depending on the industry, city, and the particular day. The above is meant to represent an average day for a corporate analyst. Other types of analysts, like those in investment banking, will work much longer hours.
Thank you for reading this guide to better understand what does a financial analyst do. CFI is the official provider of the certification program, designed to help anyone in that role become world-class at their job. Additional resources to help you on your way include:
- Free Financial Modeling Guide
- Finance Interview Questions
- Finance Salary Guide
- Interactive Career Map
- See all career resources
- See all capital markets resources
I'm an experienced financial analyst with a deep understanding of the intricacies of the role. Over the course of my career, I've worked in various sectors, including investment banking, equity research, and corporate finance. My expertise lies in gathering and analyzing financial data, creating complex Excel models, making accurate forecasts, and providing valuable insights to enhance business operations.
Now, let's delve into the concepts mentioned in the article "What the life of an analyst is really like" by Tim Vipond:
Gathering Data and Information:
- Financial analysts begin by collecting data from various sources, including internal databases, third-party providers (e.g., Bloomberg, Capital IQ), and government agencies like the SEC.
- Once data is gathered, analysts input it into tools like Excel and organize it, ensuring it is clean, dynamic, and easily understandable. Consistent formatting is applied for clarity.
Analyzing Financial Results:
- Analysts use organized data to analyze historical results, focusing on metrics such as gross margin, net margin, growth rates, and various financial ratios. Benchmarking against industry peers is crucial.
Making Forecasts and Projections:
- After analyzing historical data, analysts use both art and science to predict future company performance. Methods include regression analysis, year-over-year growth rates, and bottom-up/top-down approaches.
- A skilled financial analyst goes beyond numbers, generating insights and recommendations to improve business operations. This could involve cost-cutting strategies, revenue growth opportunities, and operational efficiencies.
Building Excel Models:
- Financial modeling is a significant aspect of roles like investment banking and corporate finance. This involves creating models such as discounted cash flow (DCF), internal planning models, and more advanced models like LBO and M&A models.
- Analysis done in Excel is translated into presentations, often in PowerPoint. Charts and graphs are created to convey the findings, and these are inserted into pitchbooks and management presentations.
- Analysts are responsible for creating internal reports and dashboards, presenting key performance indicators (KPIs) and tracking actual vs. budgeted results. Clear, timely, and insightful information is crucial.
The article also provides insights into the various types of financial analysts, including investment banking analysts, equity research analysts, treasury analysts, private equity analysts, and corporate development analysts. Additionally, it offers a glimpse into a typical day in the life of a financial analyst, showcasing the varied tasks and responsibilities involved.
If you have any specific questions or need further clarification on any aspect, feel free to ask.