Financial analysis can sound like a scary term to someone who hasn’t studied finance before, and it might be an intimidating career choice. Mainly, this is due to the myths that surround the job and title. Sometimes it even seems that financial professionals furtherÂ the mystery behind the field by refusing to simplify financial concepts. If you’re starting down the path of a financial analyst or want to know more about what financial analysts do, we’re here to bust four myths and discuss what the role of a financial analyst really is.
Myth 1: You Need a Degree in Finance to Understand Financial Analysis
Financial analysis is definitely not a generalized subject that you can learn through your school-age years like science or math, but you also don’t need a full degree in finance to understand the basics. The underlying concepts of financial analysis are actually pretty simple with a bit of common sense and logic.
Myth 2: You Need Accounting Experience to Understand Financial Analysis
An accountant’s job is to produce financial statements, so it’s true that accountants tend to understand financial analysis more quickly. However, you don’t need an education in accounting or accounting experience to understand financial analysis. Any business manager can pick up financial analysis concepts without knowing the technical aspects of accounting. In fact, the managers of most businesses are not accountants while still being responsible for results and performance.
Myth 3: You Need to Be a Math Genius to Understand Financial Analysis
Numbers and figures play an important role in financial analysis. Understanding the way these numbers behave makes analysis easier, but the highest level of math that financial analysts really deal with is basic addition, subtraction, multiplication, division, and percentages.
Myth 4: You Need to Learn a Lot of Difficult Technical Terms Before Understanding Financial Analysis
Non-finance people might get most discouraged about the use of uncommon and complicated technical terms. While it’s true that there are technical terms you will need to learn and understand, it’s not a reason to be scared or put off fromÂ entering the world of finance. As you learn cause and effect relationships and apply a little common sense, the words will start to naturally make sense to you. Once you learn a lot of these financial technical terms, you will de-mystify a lot about financial analysis yourself.
Learning about finance may begin as a bumpy ride, but it’s not an impossible task or there would be far fewer financial professionals in the world today. Becoming a financial analyst is an exciting path and once you conquer the unthinkable, you will feel prouder and more accomplished than if you had taken a path more traveled. Learning the basics about financial analysis is a skill which anyone can grasp, and it’s good knowledge to have for any field of employment. Whether you’re looking to enter the finance field or just learn a little about financial basics, don’t let these common myths scare you away from stepping into this realm.
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