5 Reasons why Chartered Accountant Should Learn Financial Modeling
Nicole had recently cleared her Chartered Accountancy exam & she feels like living on the top of the world. She is pretty excited to meet her fellow employees in the office. Nicole was feeling like she has conquered the Mount Everest & think that many congratulatory wishes will come to her. Her senior manager Andrew was pretty excited to get this news & asked Nicole about what her future plans.
She answered that I am not eager on the normal field of taxation & audit. I will prefer to make my career in the field of investment banking. As per the recent trends, it is a pretty exciting field. Can you tell me the method to enter this industry, a question asked by the Nicole very excitedly?
He responded by saying that Nicole you are sounding very preachy & I want you to tell that you should understand that learning is a continuous procedure. You can’t consider passing the Chartered Accountancy exam a mean task, but it offers you important knowledge & experience about the traditional industry that makes a boost to your technical knowledge. There is a requirement of solid knowledge about the spreadsheets, approach to preparing financial models & going through the financial details in the investment banking.
She asked Andrew “so what you suggest me”? In a response to this statement, Andrew says that “he is presently working on a merger case for one of my customers that include creating financial on the excel sheets by using financial details of acquiring organization”. I will simply suggest that you should opt for a financial modeling course that has assisted me in many different manners during this assignment.
It has played a pretty important part in the present era same as the statement given by the Andrew. This helped in making the addition of additional certifications that can boost up the growth of our career. There will be lots of candidates pass out as a beginner. Think about another individual who is looking for the similar type of job. There is a full chance that the candidates having additional certifications that can give you an extra edge over the competitors will be preferred by the companies.
We have listed the major reasons that make sure Chartered Accountants require financial modeling below:
Achieving Research Oriented Approach
There is no doubt that the chartered accountant is fully trained about the accounting & taxation, but their thinking gets transmitted into a tad mechanical after some time. The guiding principle for the majority of Chartered Accountants is working strictly as per the taxation laws & accounting standards. However, they get important training through financial modeling that allows them to read further financial statements. The Chartered Accountants are trained through financial modeling to create an analytical approach that ranges from forecasting things on the basis of historical trend to developing assumptions. It is very vital in the investment banking, financial analysis, & equity research industry.
Advantage over other professionals
You have to understand that there is a cut-throat competition in the present age. There is no doubt that Chartered Accountants are highly trained professionals when one think about the finance field, but there is a need for specialized knowledge in certain areas such as Equity Research, Corporate Finance and Merger & Acquisition Analysis other than average information about the financial statements. The Chartered accountants get assistance in financial modeling to receive these skills & attain an edge over individuals, such as CIMA, MBAs, & CFAs graduates. They are the ones who are a solid candidate for roles that involve research.
Incredible decision to accounting knowledge base
If you think that financial modeling is all about making assumptions & forecasting, then you are certainly wrong. In reality, it includes a great variety of skills, such as valuation methodologies, VBA, excel proficiency and knowledge of the coding qualitative about the industry & company.
Some exciting skills that teach by the financial modeling are mentioned below:
- An exceptional framework to solve the problems
- Skills for dividing the large quantity of data into a basic format
- Crystal clear presentation knowledge
- Developing conclusions & formulation related to the corporate strategic planning
Prior to entering the universe of financial research & analysis, the Chartered Accountants should go through all the above-mentioned skills.
Pathway to explore areas than just accounting or taxation
One of the most amazing reasons to learn the financial modeling for Chartered Accountants is that they aren’t only restricted to the Accounting, Taxation, & Accounting only. Nowadays, they are going after lots of other areas that include forex analyst, project finance manager, research analyst, etc. The majority of CAs prefer to step out of the stereotypic duties due to high compensation for these jobs & lower number of exams.
Attainting much needed analytical knowledge in less time
Although CFA is one of the best qualifications in the equity research & investment banking field, still there are lots of Chartered Accountants who prefer to enter this industry don’t have the required time to go for another tough training as a CFA. It takes years to prepare & pass CA exam. That’s why there are lots of professionals who don’t wait further after completing their exam & prefer to start their career in research & analytics as soon as possible. You can consider financial modeling as a substitute to the CFA Charter, but a short-term course of financial modeling from a well-acclaimed institute will turn out to be handy for the individuals who are looking to attain analytical & forecasting skills as soon as possible. It offers the much-needed boost & adds the required skills for stepping into the roles that are research oriented.
Which areas will it open for Chartered Accountants?
Financial modeling can assist in polishing the excel skills that are must for forecasting revenues, IB, & making right investment decisions.
Creating MIS reports that can assists in monitoring & evaluating decision making & financial performance by considering the viability of a project or investment that can be helpful for management to make better financial decisions. A standardized technique is maintained for the majority of these processes that also require some quantity of flexibility. However, a financial model makes sure that the maximum amount of precision is maintained in these processes.
It includes analyzation of cash flows, illustrating project’s financial viability, making requisite models for various projects & many more.
You can develop skills for researching the listed stocks with the help of financial modeling. Additionally, it analyzes the investment options for providing right recommendations for the clients, whether to sell or buy the stocks.
Mergers & Acquisitions
You can learn competitor analysis, valuation of acquiring organization, forecasting revenue, & computing synergy advantages.
The number of companies outsourcing their financial analysis has risen up due to the emerging KPO sector. There is a great range of companies who are in a constant requirement of expert analysts for their research works. In simple words, CAs should go for the financial modeling course for remaining ahead of their competitors if any of above things interest you.
Impressed with the suggestion of Andrew, Nicole said, Thanks Andrew. I will go for this course & put it on my priority list.
Andrew teased with the comment that now your main priority should be a celebration. I am expecting a huge celebration of your achievement.