Financial analysis—the process of gleaning insights from a company’s financial information—is a valuable skill, no matter your role. Analyzing your organization’s financial documents and contextualizing them within the broader market enables you to understand the story behind the numbers and use that perspective to make business decisions.
Don’t worry if you don’t have a finance background; there are several accessible ways to gain financial analysis skills.
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DOWNLOAD NOWMust-Have Skills for Financial Analysis
Before diving into how to build your financial analysis skills, here’s a breakdown of the skills you need to succeed.
- Reading and understanding financial statements: A company’s financial statements include its balance sheet, income statement, and statement of cash flows. Each contains vital information about the business’s financial health.
- Calculating key ratios: Ratio analysis involves calculating one metric’s ratio to another. This allows you to compare metrics across periods and organizations, because circ*mstantial factors are eliminated.
- Data storytelling: Analyzing financial statements is just the beginning of financial analysis; you also need to effectively communicate the story the data tells and propose actionable insights.
- Big-picture thinking: Financial analysis isn’t just for comparing your organization’s past and present performance; it’s also about comparing it to broader market and industry trends. Financial analysis can include creating predictive models to forecast a company’s financial movement against the industry.
There are several options to help you gain and sharpen your financial analysis skills. Here are five ways to learn financial analysis to excel in your career.
How to Learn Financial Analysis Skills: 5 Methods
1. Earn a Degree in Finance
If you aim to become a financial analyst, earning a bachelor’s degree in finance or a related field is highly recommended. Related fields include statistics, economics, analytics, accounting, and math. All are favorable options because of the quantitative problem-solving skills they teach.
While a bachelor’s degree has become a requirement for most financial analyst roles, earning a Master of Business Administration (MBA) or other graduate degree in finance or analysis can contribute to your chances of landing your ideal job.
If you’re not planning on breaking into the financial analysis field, a degree in the subject isn’t necessary, as it’s not a time- or cost-effective way to gain skills as a non-finance professional.
2. Take an Online Course or Certificate Program
Another way to gain financial analysis skills is to take an online course. Online courses allow for schedule and location flexibility. They’re also more affordable than a degree program, making them accessible to those not necessarily pursuing a financial analyst role.
For instance, consider Leading with Finance, taught by Harvard Business School Professor Mihir Desai. The course covers the basics of financial analysis, how financial statements inform broader business decisions, the ins and outs of capital markets, the pillars of value creation, and how to use multiple methods to value a business—all within six weeks.
This can be a cost- and time-effective way to gain financial analysis skills, particularly for non-finance professionals who want to use financial information to make decisions. One such professional is Paul Accornero, global chief commercial officer at a multinational appliance manufacturing company.
“I use what I learned on a daily basis,” says Accornero. “Even though I’m not in a finance role, operating in a general management position, I need to make decisions utilizing the principles we learned on a daily basis. [Leading with Finance] empowered me to do that with confidence.”
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3. Learn from Real-World Examples
Although learning financial analysis principles is important, understanding how they apply to real-world scenarios will ultimately equip you with the knowledge to use them in your own life.
To gain exposure to these scenarios, you can do research online, talk to financial analysts about how they use these skills to make decisions for their business, or enroll in a course that uses the case method.
A core component of the HBS Online learning experience, the case method presents learners with a real-world business challenge facing an individual or organization. It outlines the challenge’s circ*mstances and available information, prompting the learner to consider what decision they would make in the same situation. After reflection and discussion, the actual decision is revealed.
This exercise allows you to test your critical thinking skills and learn from a business’s successes and setbacks to apply the learnings to your own organization.
4. Gain Hands-on Experience
Sometimes, the best way to gain skills is to dive into the work and try it. If you have access to your company’s financial statements, read them. What sticks out to you? What questions do you have? What story can you derive from the numbers?
If this is a challenging exercise, ask your company’s finance employees questions. They likely work with financial statements daily and can help you orient yourself, identify the meaning behind financial data, and explain its impact on your firm.
If you can’t access your organization’s data, leverage the United States Securities and Exchange Commission’s EDGAR database, which allows you to access public companies’ statements.
Reading financial information from companies you know can be an effective way to put the mechanics of financial analysis into the context of a real company.
5. Leverage Your Network and Attend Finance-Focused Events
Another accessible way to build and bolster financial analysis skills is by leveraging your professional network. Those experienced in the field may be glad to share their expertise, experiences, and useful tips for learning and applying financial analysis.
Attending finance-focused events, such as networking gatherings, conferences, and webinars, can also be fun ways to level up your skills and grow your network. If this is important to you, make sure any courses you take have a networking component like the HBS Online Community.
Why Learn Financial Analysis Skills?
Financial analysis skills are key to making business decisions that positively impact your organization and can give you a competitive edge in the job market.
Whether you’re responding to a decline in profit margin, assessing your latest marketing campaign’s financial impact, or determining whether you can hire more employees, building your financial analysis skills is an investment in your career and your business’s financial health.
Do you want to improve your confidence and knowledge of finance? Explore Leading with Finance—one of our online finance and accounting courses—to elevate your financial analysis skills and make informed decisions at your organization. Not sure which course is the right fit? Download our free course flowchart to determine which best aligns with your goals.
