Financial Modeling Job Description

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Job Profile of a Financial Modeling Analyst

The job profile of a Financial Modeling analyst pertains to working in equity research, investment banking, corporate development, private equity, corporate finance, etc., where they perform analysis of financial data and transactions, establish links between the financial statements, prepare presentations, perform sensitivity analysis, etc.

Financial modeling job description
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Skills and Education

The basic educational criteria for financial modeling job include:

  • Bachelor degree in engineering, mathematics or accounting
  • Chartered Accounts, CFAs or MBAs enjoy preference.

Besides, a candidate should acquire the following skills to become a financial modeling analyst –

  1. Excellent Excel Skills: As a financial modeling analyst, excel skills are expected to be outstanding, with good proficiency in using pre-defined formulas, creating charts, building macros etc. Also, knowledge of VBA along with another programming language (such as Python) is a must to make it big in this field.
  2. Knowledge of Basic Accounting Concepts: To build a career in the field of finance, one needs to understand the basic accounting concepts. A financial modeler will be required to prepare investment appraisals using various financial techniques like DCF, NPV, IRR, etc.; accounting knowledge comes in handy in such situations.
  3. Problem-Solving Ability: One of the primary responsibilities of a financial model analyst is to solve problems by creating financial models. So, the analyst must have the ability to build a robust model, ensuring that solving the problem at hand doesn’t lead to another problem.
  4. Time Management: It is another key aspect of financial modeling. An analyst will not be praised even after building an effective financial model if it is not completed within the stipulated time frame. So, a financial model analyst should be able to manage time to taste success in this career path.
  5. Ability to Build a Model that is Easy to Understand: The model should be such that it aids the decision-making process of the organization. So, the analyst should build the model so that the decision-makers can understand the model easily and make an informed decision.

Responsibilities

  • Build financial models in excel based on historical information and other available industry-specific operating metrics.
  • Conduct scenario analysis based on microeconomic and macroeconomic factors to access business risk.
  • Evaluate companies using various financial valuation methods, such as DCF, comparable company analysis, capital structure analysis etc.
  • Ensure the new models' accuracy while enhancing the existing models' quality.
  • Recommend and implement process improvement measures.
  • Identify key financial and non-financial risks and advise mitigants for those risks.
  • Conduct scenario and sensitivity analysis with the intent to support investment activities.
  • Update the financial models after each earnings rollout or other similar corporate actions.
  • Analyze and identify data required to support model tracking.

Salary for Financial Modeling Job

The financial industry is known for paying high salaries, and that too for financial modeling profiles. However, the salary varies depending on the candidate's experience, the company in which they apply, and their location – candidates from Chicago and New York can secure relatively higher remunerations.

Regarding salary for the financial modeling profile, a financial analyst can earn a salary in the range of $50k to $80k per annum; a private equity analyst earns an average salary in the range of $70k to $200k per annum. An investment banking analyst gets somewhere between $85k and $180k. The compensation and the bonus are much higher for professionals with a wealth of experience in senior positions.

Experience

The best experience in financial modeling can only be earned while working for investment banks, equity research firms or other such firms that are concerned with corporate finance transactions. However, freshers can use the alternative option of online courses to gain experience in financial modeling. Experience primarily means working knowledge of building a financial model from scratch, wherein the analyst is familiar with all the practical challenges and knows how to overcome them.