Financial Modeling vs Business Analytics – What To Choose?

Many people live in a dilemma regarding Financial Modeling vs Business Analytics. People with a lack of clarity in their professional persuasions always end up serving the wrong entity. They join a company to earn money and lose their passion for work. If you are one such individual, welcome to the right place. Today, you will learn about various aspects of both streams. This article will provide the answers to your career-oriented questions. So, make yourself ready for insightful content and start reading.  

A Glimpse into Financial Modeling 

It is a method to create models based on built assumptions using Excel for the evaluation of a company’s financial performance and thereby assist the management make informed decisions for its growth. Different companies use different financial models. Some of the famous financial models are Discounted Cash Flow Model, Consolidation Model, Budget Model, Option Pricing Model, Forecasting Model, Sum of the Parts Model, Three-Statement Model, Merger Model, Initial Public Offering Model, and Leveraged Buyout Model. 

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Tools Used in Financial Modeling

Every process involves the usage of tools essential for carrying out the steps involved in it. Building assumptions and creating a financial model requires the utilization of certain kinds of tools. A good spreadsheet program is essential for a financial modeler to perform the financial analysis. Excel  is used for the range of functions and features that facilitate the building of complex financial models. If you are not familiar with the Excel application, go online and avail of sites that train you to use it

Financial modeling also deals with stock analysis. This means the financial modeler must have reliable software to carry out the analysis. The market has a wide range of software programs for the same. Choose the one that can act as a portfolio management tool as well as a powerful stock analysis tool. The application must have functions and features that allow the analyst to analyze stocks, build and test investment portfolios

A financial analyst must have a solid grip on the concepts of finance and accounting. There is no compulsion to be a certified public accountant (CPA) however, you must at least have knowledge of accounting principles. If you are not good at accounting and finance, feel free to join an online institute or offline entity to gain some understanding about the same. One trending and reliable course is Line Online Financial Modeling Course offered at IIM SKILLs

As mentioned in the beginning paragraphs, financial modeling is a kind of valuation tool. So a valuation method’s presence is mandatory to perform analysis and obtain an approximation of the fair value of the stock that belongs to the company. The commonly implemented model is the Discounted Cash Flow (DCF) method. The above list comprises essential tools however, there are other kinds of programs available in the market, all you have to do is invest some time and learn more about them. 

Skills Required to Become a Financial Modeler

Financial modeling is not betting; you cannot pick the stream randomly. You need a certain set of skills to become a financial modeler. An individual who aspires to become a professional in the financial modeling field must possess the below skill set. 

• Proficiency in software built for financial modeling
• Advanced Excel Skills
• Financial Analysis Techniques
• Analytical mindset and attention to detail
• Strong soft skills
• Business Acumen
• Adaptability and Continuous Learning

Proficiency in Software Built for Financial Modeling:

If you have chosen the FMVA program, you are expected to create detailed models for financial analysis with the help of software such as Microsoft Excel. The availability of complex formulas, macros, and functions is for their application in developing complex structures like financial models. This means you must be proficient in Microsoft Excel. That being said, you can also gain a competitive edge by acquiring knowledge about other relevant tools available in the industry.

Advanced Excel Skills:

Believe it or not, advanced Excel skills will make you stand out among others. In Simple words, advanced Excel skills form the base of financial modeling. You can also ensure the same skills to make dynamic graphs and charts, manipulate data, utilize pivot tables, and apply advanced algorithms. No wonder employers look for candidates with excellent Excel skills to create financial models for their companies. 

Financial Analysis Techniques:

I would be joking if I said that you don’t require knowledge about techniques related to financial analysis. Ask me why? Because you cannot perform a financial analysis without the basic understanding and skills to use the relevant tools. Your ability to use pivot tables, manipulate data, use advanced algorithms, and create dynamic graphs and charts will make you shortlisted for the role of a financial modeler. Another reason for employers to assign you the development of financial models is your strong Excel skills that will help you in the quick evaluation of data. 

Analytical Mindset and Attention to Detail:

Meticulousness is a critical skill for a potential financial analyst. Financial valuation and analysis depend on the consideration of accurate data. That can be achieved when the candidate has attention to detail and does not miss considering crucial inputs. Careful analysis will provide error-free models and accurate computations. If you are keen on serving a company in the financial modeling field, you must be efficient in identifying potential anomalies, contractions, or problems in the given data. Professionals with an analytical mentality are preferred over the rest as they can think critically, make sensible decisions, and solve complex problems. 

Strong Soft Skills:

Being an expert at creating financial models is not enough. You must possess the ability to clearly communicate your recommendations and findings with the stakeholders and management. Financial modeling often involves dealing with obtaining solutions to complex problems and communicating the same with the concerned teams. This means you must have strong written and verbal communication skills to survive in the industry. Strong communication skills facilitate effective coordination among financial analysts, colleagues, management, and clients. 

Business Acumen:

Solid understanding of the industry, business, and economic fundamentals will impact the financial valuation and modeling. Individuals with the ability to study the analysis for the creation of financial models to meet the objectives and requirements of the business have a higher probability of getting hired for their dream roles. No wonder employees with business acumen offer valuable and insightful recommendations to assist the management in strategic decision-making.  

Adaptability and Continuous Learning:

It is a fact that finance is a realm with a welcoming nature for new rules, methods, and tools. Curiosity is a mandatory trait to become a financial professional as you need to be hungry for new information and thereby adapt to the latest industry developments. In simple words, the flexibility to handle new theories, best practices, and technologies related to financial modeling software will make the life of a financial modeler easy. This quality also gives the employees a competitive edge in the market and secures their jobs. Possessing these skills will allow the FMVA entities to successfully traverse the intricacy of financial modeling, efficient valuation analysis, and thereby contribute to the enterprise’s success in any chosen industry. 

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Financial Modeling vs Business Analytics – Career Opportunities

Once you acquire the required skills for performing financial modeling, you have the option to enter relevant fields and start working in your dream role.

Some of the Common Opportunities That Knock on the Door of a Certified Financial Entity Are Listed Below:

• Investment banking
• Equity Research Analyst
• Financial planning and analysis
• Credit Analyst
• Financial Modeling & Valuation Analyst (FMVA)
• Corporate Finance
• Financial Analyst
• Project Finance
• Consultancy Firms
• Real Estate

Note:

The obtained certification will define the opportunities for you as a degree will have more value than a crash course certificate. If you want to explore advanced options, you need to choose a higher level of training. 

A glimpse Into Business Analytics

Business Analytics is a step-wise approach that employs a set of technologies and disciplines to solve business problems using data analysis, statistical models, and related quantitative methods. Data from the company is gathered for statistical analysis to lead to strategic decision-making. This is why most corporations treat their data as an asset. The success rate of the method is dependent on the quality of data, and the skill set of the analysts to understand the business and technologies for deriving insights from data and promoting decision-making. There are five kinds of business analytics based on the tools and methodologies adopted; Descriptive Analytics, Diagnostic Analytics, Predictive Analytics, Prescriptive Analytics, and Cognitive Analytics. 

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Tools Used in Business Analytics

As mentioned earlier, different technologies and tools are employed for performing business analytics. Some of the common tools are Microsoft Excel, Microsoft Power Bi/Tableau Desktop, R/Python, and SQL.  Microsoft Excel is the best application to explore smaller sets of data. While Tableau Desktop allows analysts to visualize data with dashboards. Microsoft Power Bi can be used as an alternative to Tableau Desktop. Python or R gives the users an opportunity to build statistical models for making predictions about the picked data. SQL on the other hand, allows communication and interaction between the users and the databases. Many technologies and tools are employed in Business Analytics, popular ones are Sisense, Splunk, QlikView, Tibco Spotfire, Knime Analytics Platform, and Dundas Bi. 

Some companies make use of several Bi and BA tools to automate advanced data analytics functions and that require minimum knowledge or specialized skills of data science and programming languages. Such tools organize and analyze data gendered by enterprise cloud applications and the modern internet of things. These applications are usually made a part of enterprise resource planning, customer relationship management, and supply chain management. 

BA tools have many uses. For example, they can facilitate prediction for users regarding a customer’s cancellation of a service with a subscription. The company will use enterprise applications to produce aggregate data and then employ BA tools to share the data with the employees. The chosen BA tool will let the employee identify potential ex-customers and take necessary actions to retain them.

Every Organization Must Consider the Following Points Before Finalizing BA Tools:

• Sources of their data
• Nature of data
• Features of the tool

Skills Required to Become a Business Analyst

Any good BA tool is user-friendly and intuitive with a range of features to conduct advanced analytics. One of the key differences between Financial Modeling is the skills used for the methods. These help us understand Financial Modeling vs Business Analytics in a better way. 

Technical Skills: 

Almost all kinds of business processes require a certain set of technical knowledge and skills. The professionals dealing with business analytics require the below type of technical skills. Financial Modeling vs Business Analytics? Which stream is the best for you based on skills? Read the below set of technical skills required for a business analyst.

• Mathematics, probability, and statistics: Statistics and probability form the foundation of business analytics. They facilitate understanding numbers for conducting hypothesis testing, probability theory, and regression analysis. Analysts are also expected to have knowledge of mathematical concepts like algebra, linear programming, and calculus. 
• Data analysis and mining: Data mining is a crucial activity that helps in the identification of hidden patterns and trends from the raw data. Different sources of information are provided to the employees for analyzing it. They are obligated to use their analytical skills to find outliers, trends, and patterns from the data and thereby, provide insights and recommendations. 
• Statistical programming languages: Statistical languages are in high demand in the industry. Commonly used languages are Python and R as they have the ability to handle large data volumes of the business. Data transformation becomes easy with the help of programming languages; they allow the creation of new variables from existing ones or mathematical transformation that is conducted based on variable distribution. The boast libraries related to languages promote the easy creation of predictive models. 
• Visualization: Every industry requires data visualization. It is helpful to know what the professionals do with data and the disclosure aspect to the clients. Real-time visualizations have come up in recent times to elevate the entire visualization spectrum. Any potential analyst must have an in-depth understanding of visualization techniques to choose appropriate graphs or charts to present a particular set of data. As noted previously, famous visualization tools are Power BI and Tableau.

Financial Modeling vs Business Analytics – Soft Skills

One other aspect that gives a clear picture of Financial Modeling vs Business Analytics is the set of soft skills essential to working in a business analytics domain. 

• Communication skills: Any data is useless if the stakeholders and management are unable to understand it. For the same reason, a business analyst is expected to have strong communication skills to present the data to concerned parties in a simple and actionable way. They must also possess the ability to take feedback and then make changes accordingly. 
• Business Acumen: This is one quality that could remove confusion from people’s minds and make them believe that it is not Financial Modeling vs Business Analytics. That’s because this is a mandatory skill in both streams. This is a characteristic to be present in the employees to know the purpose of business analysis. This skill will allow the individual to understand the industry trends, competitive landscape, and business objectives. Apart from knowing these, the analysts must also have the capacity to spot opportunities for growth and development. 
• Attention to detail: Even a tiny error in the analysis can deviate the business from making progress. Keen observation and attention to detail are important to find out possible errors and thereby rectify them. This quality will promote the delivery of accurate outcomes from the analysis. 
• Time management: There will be deadlines for each project. This is why it is mandatory for employees to manage their time effectively. Simply put, the analysts are supposed to prioritize their tasks and ensure completion on time. 

Financial Modeling vs Business Analytics – Career Opportunities

If you are stuck on knowing Financial Modeling vs Business Analytics, take time to compare the job prospects of both fields. An individual with the above-listed skill set has the freedom to choose any of the below-mentioned career profiles. 

• Business Analyst
• Data Analyst
• HR Analyst
• Financial Analyst
• Supply Chain Analyst
• Marketing Analyst
• Data Scientist
• Programmer Analyst
• Statistician

Note: The authenticity of the certificate and its contents can restrict or unveil many opportunities for the candidate. For example, a bachelor’s degree in Business Analytics can let you become a Data Architect whereas a mere crash course document may not allow you to be one. 

Conclusion on Financial Modeling vs Business Analytics:

Financial Modeling and Business Analytics both focus on deriving insights from the data. The former method has more to do with financial performance and built assumptions for creating models to produce reliable recommendations and interpretations for business growth. Whereas the latter is concerned with the usage of raw data obtained from various sources for processing, analyzing, and leading to predictions and suggestions for the progress of a business. 

Common kinds of financial models are Discounted Cash Flow Model, Consolidation Model, Budget Model, Option Pricing Model, Forecasting Model, Sum of the Parts Model, Three-Statement Model, Merger Model, Initial Public Offering Model,  and Leveraged Buyout Model. Business Analytics is classified into five types which are Descriptive Analytics, Diagnostic Analytics, Predictive Analytics, Prescriptive Analytics, and Cognitive Analytics. Isn’t it now easy to view them as equally opportunistic fields rather than Financial Modeling vs Business Analytics?

Financial Modeling vs Business Analytics? What is it? It is common to have questions regarding the demand for both streams. The main reason for the same is Financial modeling and Business Analytics are the trending fields in the current industry scenario. Many of the learners are rushing toward the courses and institutes that offer certification programs to acquire relevant skills and credibility. 

A person aspiring to learn about financial modeling must have the below-listed skills to enter investment banking, financial planning and analysis, corporate finance,  project finance, consultancy firms, and real estate.  They also have the opportunity to become an Equity Research Analyst, Credit Analyst, Financial Modeling & Valuation Analyst (FMVA), or a Financial Analyst.

• Proficiency in software built for financial modeling
• Advanced Excel Skills
• Financial Analysis Techniques
• Analytical mindset and attention to detail
• Strong soft skills
• Business Acumen
• Adaptability and Continuous Learning

A student of Business Analytics must possess the below qualities to become a business analyst, data analyst, HR analyst, financial analyst, supply chain analyst, marketing analyst, data scientist, programmer analyst, statistician, or any related designation.

Technical Skills: 

• Mathematics, probability, and statistics
• Data analysis and mining
• Statistical programming languages
• Visualization

Soft Skills:

• Communication skills
• Business Acumen
• Attention to detail
• Time management

Anyone can upskill themselves using online courses or joining traditional colleges alongside attending workshops, seminars, exploring relevant applications, and involving in short-term live projects. You can also decide on the right career path (Financial Modeling vs Business Analytics) as per your current skills and your determination to upgrade them.

FAQs on Financial Modeling vs Business Analytics

Q. What is a better course for a person with Mathematics, probability, statistics, Data analysis, and mining skills?

One of the best fields for you is Business Analytics as it requires knowledge about technical skills like mathematics, probability, statistics, data analysis, and mining skills. You may also require to seek training to obtain related qualities to become an efficient business analyst. 

Q. Financial Modeling vs Business Analytics? Which and why to choose?

If you love playing with numbers and have skills related to finance and accounting along with essential subjects such as proficiency in financial modeling, advanced Excel skills, and financial analysis techniques, pick Financial Modeling. On the other hand, if you have a grip on statistics, mathematics, data mining, visualization techniques, and statistical programming languages, join a Business Analytics course. 

Q. Can I become a Marketing Analyst after completing a Business Analytics course?

Yes, you can become a marketing analyst if you have knowledge about business analytics and relevant subjects like attribution modeling, market research skills, experiment design, PowerPoint, and CRM. That being said, business analytics opens doors for a variety of career prospects, choosing a course with a comprehensive curriculum.