Most individuals think just acquiring knowledge on a few topics related to financial modelling can make them eligible to work as a financial modeler. But, in reality, it is not the case. To know why financial modelling is an expert's job, first, you need to know what financial modelling is. So, read on...
What is financial modelling?
Financial modelling is the task of developing an abstract financial model based on a real-world scenario. The primary responsibility of the financial modeler is to link financial statements in Excel, analyze financial information, do ad hoc analysis, create presentations, perform sensitivity analysis, and analyze financial transactions. A company uses it for the following purposes:
- Foresee the roadmap of profitability
- Valuation of a security
- To explore the benefits of the merger
- Portfolio performance
- To know the future need of raw matters
- Discovering new market opportunities
- Trace undervalued securities
- Quantify and predict risk
- Check investment requirements
Financial modeling is often regarded as an expert's job as it demands mainly a high-level skill set. Most financial modeling courses provide students with all the required knowledge needed to be a successful financial modeler. But, what are the skills required for this job? Let’s find out.
- Decision-making ability
Based on financial models, you must be able to make impactful decisions. As a financial modeller, your inputs will be responsible for making the future pathway of a business in the correct lane.
- Excel Skills
Excel is your best friend if you are a financial modeler. You have to be competent in using it, and all the formulas, macros, charts, and VBAs should be at your fingertips. If you are not good at it, then you can learn financial analysis beforehand.
- Time management
Jobs related to financial modeling demand time management at its best. As a responsible employee, you might need to produce models within a time frame. And, you have to figure out how you can accomplish it within a limited time. In case you are not good at it, then you will have to spend some sleepless nights.
- Problem-solving ability
Keeping a problem-solving attitude always is a must for this job. Although a financial model is created to solve a single problem, it often raises another one. Hence, this job will test your skills to the fullest and keep you on the brink.
- Knowledge of finance, accounting, and valuation
Making a career in any field of finance requires a fundamental understanding of accounting. As a professional, you have to be competent in advanced knowledge regarding IRR, DCF, NPV, etc. As valuation is also an important aspect of accounting, make sure you know every in and out of it.
Hence, it is evident from the above pointers that a financial modeling job demands a lot of subjective, analytical, and soft skills. Some of India's best financial analyst course provides comprehensive knowledge on accounting and finance. But, to acquire soft skills, candidates might opt for a short-term course that can help develop soft skills.
Top 10 financial modeling careers of 2022
- Equity Research
- Investment Banking
- Mezzanine Finance
- Real Estate Development
- Commercial Banking
- Venture Capital
- Private Equity
- Corporate Development
- Financial Planning and Analysis
Besides, one of the most critical questions that come to mind is what do financial modelers do? The job description of a financial modeler includes:
- Developing models based on previous data to forecast industry-related metrics
- Enhancing and developing transaction models
- Performing scenario analysis by accessing risk based on micro and macro factors
- Scrutinizing non-financial and financial risks and providing a solution for those
Apart from these, there are also various responsibilities a financial modeler might have, and these roles also depend on experience and expertise level.
Thus, enrolling in a financial modelling course will provide an edge for candidates from other finance professionals and offer a career with myriad scopes.