A financial analyst looks at trends, graphs, charts and the whole cosmos in totem to figure out what the future holds for finances. They know long waves and short waves, and look with trepidation for the “Hindenburg omen,” and then say, with confidence, where the economy will trek. They don’t necessarily say where a single company will go, although that is often what clients want to know.
As the name implies, a financial analyst works with all financial bonds, equities, or anything else required making an accurate financial view. An analyst will look at last year’s books and compare them to this year, and project what the next year will bring. A financial analyst tends to specialize in a specific industry or with a specific instrument to encourage a broad knowledge of the subject.
Duties of the Financial Examiner
The analyst fits the green eye-shade image of accountants. The pouring over books in a hunchbacked fashion over green ledgers stacked to the ceiling has given way to computers and the cloud. The simple numbers have given way to projections that can be remarkably accurate and fueled by psychology and other disciplines.
The analyst tracks the trends and determines the actual trend lines of a company to determine the present and future health. He will put it in a binder or a screen presentation and present it to company executives or others as needed. Companies use the information to plan strategies for the upcoming quarter or year.
One of the points an analyst will look at is productivity. Knowing not only the numbers but the reality allows an analyst to make recommendations that can improve the operation and its profitability. That is the ultimate objective in any business. A financial examiner can work for the government, business, charity or any organization that works with money, making monthly and annual reports.
An example from history would be Toni, the hair dye. Using logic, the company brought the product to market for a quarter, and it flopped. A financial analyst in the dawn of the profession looked at the problem. It was a good product at a good price, but women would not gamble on such a bargain with something as important as their hair. The recommendation was to change only the box and make the price $1.25. It was an immediate hit, and it spurred other companies to enter the extremely profitable market.
Another example of a less beneficial entry that an analyst drove was called the Edsel, a car produced by Ford, and that has become synonymous with the concept of a flop. The problem is that everything they looked at was right. The trends were all beneficial and the car was a quality product. The problem was that they were using the trends of the early and mid 1950s. As the product came to market in late 1957, no one saw a minor recession coming, and it would cause some pull back in the market.
The analysts realized that as the company was coming to market, the marketing and financial guys got together and made the truly brilliant decision that would doom the car; they decided to bring it to market six weeks before the rest of the industry and capture the market before anyone else could put wheels on the road.
The problem with this decision was that this was the era of annual model changes, and although they had good foot traffic during the six weeks, people chose to wait and see what the other companies had to offer.
By the time the others came to market, the Edsel was old news and would leave the market forever in 1961, with Ford having lost $250,000,000. This is the sort of practicality and prediction that you will have to consider in your exciting career as a financial examiner.
Examiners also look at new products and judge their stability. They do not always get it right, but careful attention to detail can prevent major mistakes and save companies millions—in the end, saving them from bankruptcy. The trends can change quickly, and an examiner has to be able to see the past and use it to judge the future.
This is a tougher job than it may seem, but if you want respect, high salary and heavy responsibility, this is a job for you!