FIN 320 Project One Financial Analyst Job Aid

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School

Southern New Hampshire University *

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Course

320

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Finance

Date

Jan 9, 2024

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docx

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LaTanya McCormick FIN 320 Project One Financial Analyst Job Aid Financial Responsibilities  a variety of tasks such as analyzing past results and identifying trends  develop financial models.  helping investors find profitable investments.  the necessary knowledge of Excel and its functions to analyze and interpret data.  You will additionally be able to drive process improvements.  improve the efficiency of your organization by working with multiple tools and techniques. Financial Management Decisions You must have these skills to help the management determine the optimal financial decisions for the organization. The reports and analysis that are generated will be used to develop a budget for the organization's future expansion. The various departments will use the financial models to determine which areas of the organization are performing well and which areas need improvement. The information collected by the financial analyst will be used to help the management find the appropriate source of funds and control the cost of capital. This will help prevent the organization from becoming heavily leveraged and lose its credit rating. As the company grows, it will require more cash to finance its expansion. The financial analyst will have the necessary skills to make informed decisions and manage the organization's financial resources. Accounting Principles The principles of GAAP are used by accountants to govern the various aspects of accounting. They help standardize and regulate the methods and definitions used by practitioners all across the country. Some of the most common principles include the recognition of revenue, the matching principle, the materiality principle, and the consistency principle. Although the use of various accounting principles is allowed under GAAP, each method must be disclosed in reports and any changes must be noted for consistency. By analyzing financial statements, you can learn more about your company's operations and improve your career. Having a good understanding of the financial health of a company can help an employee or manager make better decisions. It can also help them determine how they should allocate their resources. Having this knowledge can prevent a manager from wasting time on projects that don't contribute to the company's goals or objectives. Being knowledgeable about a company's financial health can also help employees determine if it's a good time to ask for a raise or leave a company that's in trouble. Having accurate documentation of financial health is very important to prevent a company from losing money. If a company is publicly traded, its financial health information can be used by other

companies to determine if it's worth investing in. If the data is inaccurate, the organization could be fined by the Securities and Exchange Commission or its leaders could face jail time. Financial Statements This position requires the ability to create, interpret, and make financial statements. These statements are used by the board of directors and investors to determine if we should be investing in the company. We must have the ability to make these statements very accurate. Financial analysts are also used to evaluate a company's potential earnings and identify areas of expansion. They can additionally look at the financial statements of other companies to see if we should buy or invest in them. For instance, if a company is looking to expand its operations, the analyst should be able to determine the best price for the purchase. Financial Terminology [In this section, explain how a financial analyst uses key financial terms every day. Make sure your response is clear and easy to understand. Define each term listed below. Then, for each term, write one or two sentences showing how a financial analyst might use the term. In your response, imagine the analyst is communicating with management, helping them make an important decision.]  Financial statement o Definition: Written records that show the business activities and how the company is performing financial o How this is used: Creditors, investors, and market analysts use financial statements to assess a company's potential earnings and health. These include the balance sheet, cash flows, and income statement.  Liquidity o Definition: The ability or ease with which assets can be converted into cash o How this is used: The liquidity position of a company is computed by taking into account its short-term and long-term debts. Short-term liquidity refers to the ability of a company to meet its obligations immediately. On the other hand, debt capacity is the ability to meet its obligations over the long-term.  Working capital o Definition: The amount of capital needed to carry on a business o How this is used: Working capital refers to the difference between the current assets and liabilities of a company for a specific period. For instance, during the busy season, a company needs to have a larger amount of capital to pay for additional employees and inventory.  Diversification o Definition: the act or practice of manufacturing a variety of products, investing in a variety of securities, selling a variety of merchandise, etc., so that a failure in or an economic slump affecting one of them will not be disastrous.

o How this is used: Apple is a great example of diversification. The company started as a manufacturer of computers, but eventually moved into mobile devices. As technology changes the possibilities are endless.  Time value of money o Definition: the concept that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim. The time value of money is a core principle of finance. A sum of money in the hand has greater value than the same sum to be paid in the future. o How this is used: Instead of investing your money in a safe, you should invest it now instead. For instance, if you put $10,000 into a safe five years ago, you won't have the same purchasing power as if you invested in it now. Having this amount invested will allow you to buy less as its value has depreciated. References Dictionary.com. (n.d.). Dictionary.com. https://www.dictionary.com/ Fernando, J. (2023, March 28). Time value of money explained with formula and examples . Investopedia. https://www.investopedia.com/terms/t/timevalueofmoney.asp#:~:text=The %20time%20value%20of%20money%20(TVM)%20is%20the%20concept%20that,be %20paid%20in%20the%20future.

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