Who is the FP&A Analyst?

Working in Financial Planning & Analysis

FP&A is a different team formed within a corporate entity that is linked with top management, treasury department, and other departments to create and project the cash flowCash FlowCash Flow is the amount of cash or cash equivalent generated & consumed by a Company over a given period. It proves to be a prerequisite for analyzing the business’s strength, profitability, & scope for betterment. read more and profit and loss statement for the board of directors or the top-level management for strategic decision making and for an effective decision regarding the effectiveness of business by improving the cost of operations. It is also used to show and present the financials and growth of the corporation to the potential investor and the shareholdersShareholdersA shareholder is an individual or an institution that owns one or more shares of stock in a public or a private corporation and, therefore, are the legal owners of the company. The ownership percentage depends on the number of shares they hold against the company’s total shares.read more.

Responsibilities of FP&A Analyst

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There are lots of responsibilities that a financial analyst takes over, and some of them are as follows:

  • Collection and record of the relevant historical data for the analysis purpose, which might impact the financials of the corporate entity.Management of a database that contains financial records and statements.Understanding and keeping track of all the major effects of the micro and macro environmentMacro EnvironmentMacro environment refers to the condition that impacts the whole economy instead of a single industry or sector. It comprises inflation, monetary or fiscal policy reforms, employment rates, gross domestic product (GDP) trends, and shift in consumer spending.read more economy on the corporate entity.We are maximizing the effectiveness of the cost of operation by analyzing the practice of the business and business delivery with that of market demands.We are creating and preparing detailedFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more financial reportsFinancial ReportsFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more and models for analysis by the top management of the company and the potential investors etc.

FP&A Analyst Skills

For being a Financial Planning and AnalysisFinancial Planning And AnalysisFinancial planning and analysis (FP&A) is budgeting, analyzing, and forecasting the financial data to align with its financial objectives and support its strategic decisions. It helps investors to know if the company is stable and profitable for investment.read more Analyst, the following skills are required.

  • Analytical Intellect: The person should be familiar and tactical in analyzing the historical data of the relevant field and the financial impact of the same over the industry, which includes the data analysis and financial analysisFinancial AnalysisFinancial analysis is an analysis of finance-related projects/activities, company’s financial statements (balance sheet, income statement, and notes to accounts) or financial ratios to evaluate the company’s results, performance, and trends, which is useful for making significant decisions such as investment, project planning and financing activities.read more skills altogether.Financial Modelling or Representation Skill: The analyst should be able to represent the analyzed data into a simple model or project presentation like ratio analysisRatio AnalysisRatio analysis is the quantitative interpretation of the company’s financial performance. It provides valuable information about the organization’s profitability, solvency, operational efficiency and liquidity positions as represented by the financial statements.read more, etc.Should Have Fair Presenting and Marketing Skills: The analyst should be able to sell his analysis to the top-level management of the corporate industry like CFO or directors etc.Should Have Knowledge and Practice Over Excel and Other ERP Software: The analyst should have good knowledge of excel and reasonable skill in the ERP and other customized software used for keeping the books of accounts of the relevant corporate industry.Should have the skill of strategic decision making and should have proper knowledge of the practice of the corporate industry.Should have good math skills and attentiveness so as not to miss even tiny transactions that may influence the result presented by the analyst to theBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals.
  • read more board of directorsBoard Of DirectorsBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals.
  • read more.

Salary of FP&A Analyst

The salary and the bonuses paid to an FP&A Analyst majorly depend upon the size of the corporate entity as the large companies making good profits usually pay more than that of a smaller company. But generally, the experience and expertise of the FP&A Analyst that he introduced into the corporate entity he joined determined his pay-out. In normal circumstances, the salary of a beginner analyst varies from around $45K to $50K annually, whereas any senior analyst can make around $95K to $100K annually. Depending upon the position that he is offered, he may even be able to make it to six-figure annually, i.e., at the position of a CFOCFOThe full form of CFO is Chief Financial Executive, and he or she is a top level executive of the firm who is responsible for the firm’s overall finance functions and has the authority to make financial decisions for the organization. read more (chief financial officer), Manager, or at a position of a director of a big multi-national company can enable FP&A Analyst to earn up to six or seven-figure money annually.

FP&A Analyst: Entry Level

After the qualification, an aspirant can join as a junior analyst either in a firm or in the corporate industry. Depending upon the same, the analyst grows into his profession. In the case of Investment banking and other capital marketCapital MarketA capital market is a place where buyers and sellers interact and trade financial securities such as debentures, stocks, debt instruments, bonds, and derivative instruments such as futures, options, swaps, and exchange-traded funds (ETFs). There are two kinds of markets: primary markets and secondary markets.read more fields, the analyst can expect to grow with the experience while attaining higher responsible positions. The analyst can achieve a senior financial analyst position in a span of 3 to 5 Years and could achieve a level of Analyst Manager or soon achieve a position of director within the corporate entity. In some other fields of work, there is a high probability that a newly joined analyst may remain posted to the same position for a longer period.

FP&A Analyst: Exit Strategy

Some of the analysts work in the same corporate industry and might be working in the same position. But most of them, after a span of 3 to 5 years, start to grow and may end up in the position of Analyst Manager, COO, CFO, etc., and may also reach the level of director of the corporate industry. Some analysts may end up in their practice by becoming a consultant for the clients, creating their firms, and carrying on their profession.

Conclusion

A corporate financial analyst works closely with the executive teams and helps in strategic decision-making for the board of directors, CFO & CEO, etc. The right knowledge, time utilization, and the customer can land the analyst in a very profitable business and success in the future. Thus, the analyst plays a key role by analyzing the various parts of the corporate industry for projecting the future financials and cash flow of the business industry and hence receiving healthier remuneration.

This has been a guide for FP&A Analysts. Here we discuss the personality qualities of an FP & A analyst, their working, responsibilities, salary, and exit opportunities. You can learn more about finance from the following articles –

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