The Urgency of Learning Financial Analysis for Managers and Professionals

Learning financial analysis is an absolute necessity in the era of fast-paced and data-driven business.

Based on McKinsey research, companies that actively develop financial analysis capabilities across various organizational lines are able to increase the effectiveness of strategic decision-making by up to 30%.

In Indonesia itself, a number of large companies such as those in the FMCG and technology sectors that have managed to survive and even grow amidst the 2020–2021 global crisis have proven to have a strong financial analysis system as the foundation of their business strategy.

This data confirms that financial analysis skills not only enrich individual expertise but also strengthen the resilience and resilience of the business as a whole.

In this article, you will better understand the urgency of learning to analyze finances, starting from getting to know the duties of a financial analyst and knowing who needs to use it in the company.

Roles of a Financial Analyst

A financial analyst is not just about preparing financial reports or making projections of numbers.

According to Aswath Damodaran, a valuation and finance expert from New York University, "Financial analysis is the bridge between numbers and strategy."

This means that through sharp financial analysis, management can translate financial data into strategic insights that can be relied on in making business decisions.

Therefore, the main tasks of a financial analyst include:

• Processing financial data into actionable information, not just passive and meaningless numbers.
• Analyzing trends in income, expenses, profits, investments, and identifying potential risks and opportunities.
• Supporting financial planning and investment decision-making, both for business expansion, operational efficiency, and risk mitigation.

In a Harvard Business Review article entitled "The New Skills of the Financial Analyst", it is stated that in the modern business era, financial analysts are expected to have not only technical skills in data analysis, but also communication skills to translate analysis results into business narratives that are easily understood by senior management.

This means that they act as strategic partners, not just "number keepers."

In a study conducted by McKinsey entitled "The Evolving Role of the Finance Function", companies with mature financial analysis functions are able to increase the effectiveness of strategic decision-making by 20-30%.

This is due to the shift from a focus on mere reporting to forward-looking analysis that directs future business steps.

In the context of a company, the presence of a strong financial analyst will:

• Provide data-based scenario simulations to support decision-making by the CEO and stakeholders or policy makers.
• Provide objective valuation analysis of new projects and initiatives.
• Help management anticipate potential liquidity pressures or market uncertainty more quickly.
• Provide early warning of financial performance that is not in line with projections.

As a real illustration, several large companies in Indonesia that have successfully weathered the 2020–2021 crisis, such as the FMCG and technology sectors, have shown that the sharpness of future-oriented financial analysis is one of the main differentiating factors between those who survive and those who fall.

Therefore, company management needs to strengthen financial analysis skills in the company.

What is strengthened is not only the number of people who master financial analysis skills, but also in terms of quality, the analysis tools used, and ongoing training.

That way, management can ensure that every decision they make is based on strong data and in-depth analysis, supporting the company's ambition to continue to grow sustainably.

Who Needs Financial Analysis Skills in Their Company?

Financial analysis is no longer a skill exclusive to finance teams.

A Harvard Business Review article titled "Every Manager Should Be a Financial Analyst" states that in the modern business world, every manager needs to have a basic understanding of financial analysis to make more strategic, data-driven decisions.

Based on our experience in Prasmul-Eli and various financial management literature, here are groups of employees who should have financial analysis skills.

1. Finance and Accounting Team

The finance and accounting team is definitely the main group that must master financial analysis skills.

They are the front line in processing financial reports, projecting cash flow, and evaluating the company's financial performance.

These financial analysis skills are important to improve the accuracy of their analysis and strengthen their ability to provide strategic insights, not just historical reports.

As stated by Deloitte in its study "Finance 2025", the future of the finance team is as a proactive strategic advisor, not just a number recorder.

2. Division Managers and Department Heads

Many operational decisions have implications for financial conditions, for example decisions to expand, recruit additional resources, or purchase new assets.

With a proper understanding of financial analysis, managers can:

• Create more realistic budgets,
• Conduct cost-benefit analyses of their projects,
• And read internal financial reports to make more informed decisions.

Due to the importance of understanding financial analysis, division managers and department heads are the second important group to learn proper financial analysis.

In research conducted by McKinsey entitled "Building Financial Acumen Across the Organization" found that companies that train non-financial managers in financial analysis can increase operational efficiency by up to 18%.

3. Business Development and Sales Team

They are the spearhead of business growth. Mastering the financial aspect allows them to:

• Understand the financial impact of business deals.
• Prepare more profitable proposals.
• Design sales strategies that consider profit margins and payment risks.

Knowledge of financial analysis in this division will encourage healthier business growth because it affects the balance between revenue growth and the company's cash flow in the long term.

4. Project Manager and R&D Team

Every project, especially those based on innovation and technology, requires financial analysis to ensure investment feasibility and estimate ROI (Return on Investment).

In its report entitled "The Value of Financially Literate Project Teams", Gartner asserts that projects led by managers with good financial literacy are twice as likely to achieve time and budget targets.

Do You Have the Right Financial Analysis Skills?

Mastering financial analysis is an investment in skills that will have a big impact on your career.

With these skills, you can have a positive impact on the business in the company where you work.

Additional knowledge and skills about financial analysis will help decision making from a financial perspective from each work division.

Thus, strategic decision making also takes into account the impact on the company's financial performance.

You can master financial analysis skills by taking the Financial Analysis Program training from prasmul-eli.

This training even provides comprehensive material, which is specifically designed for managers and professionals to have financial analysis competencies.

Let's make the best contribution to the business by having the right financial analysis skills.