FIN 320 Project One Financial Analyst Job Aid

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Straighterline *

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320

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Finance

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Jan 9, 2024

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docx

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2

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FIN 320 Project One Financial Analyst Job Aid The goal of this job aid is to provide an overview of the day-to-day responsibilities of a financial analyst and to describe the role financial management plays in an organization. Financial Responsibilities Financial analysts examine financial data and use their findings to help companies make business decisions. Analyze past and present financial data. Prepare reports and projections based on the financial data. Evaluate current capital expenditures and depreciation. Explore investment options. Establish and evaluate profits plans. Financial Management Decisions Financial management is vital to owners and business managers and is key to a business success. Consequences of their management decisions on profits, cash flow and the financial condition of the company must be considered. The bullet points I have listed above are super important for upper management in order to make decisions based on the analysis of the report. They need to be able to get specific numbers as fast as possible in order to see anything that could go wrong. Accounting Principles Accountants use three fundamental principles when preparing financial statements, which are the revenue recognition principle, the matching principle and the historical cost principle. This information is critical in order to understand the information that is on financial statements. The accounting principles are rules and guidelines that companies need to follow when they are reporting financial data. There are three main financial statements a company heavily depends on which are the balance sheet, the income statement, and the cash flow statement. These financial statements are used in order to manage business operations, it also is a way to see the company’s financial health. Financial Statements Financial statements are written records that convey the business activities and the financial performance of a company. What financial analysts need to do their job are the balance sheet, the income statement, and the cash flow statement. The balance sheet provides an overview of assets, liabilities, and stockholders’ equity. The income statement primarily focuses on a company’s revenues and expenses. The cash flow statement measures how well a company generates cash to pay its debt, also funds its operating expenses as well as fund investments.
Financial Terminology Financial statement o Definition: Financial statements are written records that show the business activities and the financial performance of a company. o How this is used: Financial analysts as well as investors use and analyze the financial data found in the financial statement. This way they can see the performance of the company as well as to evaluate the company’s financial health a possible potential. Liquidity o Definition: The availability of liquid assets to a market or company. o How this is used: A company’s liquidity is important to gauge if a company is able to pay off short-term debts and current liability. Working capital o Definition: Is the difference between operating current liabilities assets and operating current liabilities. o How this is used: Working capital is used to measure a company’s operational efficient and short-term financial health. Diversification o Definition: Is a risk management strategy that mixes a wide variety of investments within a portfolio. o How this is used: It can help them expand into markets and industries that they haven’t currently explored. Time value of money o Definition: The time value of money is the concept that money you have now is worth more than the identical sum in the future due to its potential earning capacity. o How this is used: This is used to help guide investment decisions by understanding the time value of money. References Murphy, C. (2020, October 27). How to interpret financial statements. from https://www.investopedia.com/terms/f/financial-statements.asp Woodruff, J. (2019, January 28). Why is financial management so important in business? from https://smallbusiness.chron.com/financial-management- important-business-57073.htm
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