What is meant by financial analytics?
Finance analytics provide insight into the financial performance of an organization. Financial analytic applications digest volumes of finance and accounting data, typically based on historical enterprise financial transactions, to discover and understand patterns.
Financial analysis refers to an assessment of the viability, stability, and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios and other techniques, that make use of information taken from financial statements and other reports
What does a financial analyst do?
Financial analysts work in banks, pension funds, insurance companies, and other businesses. Financial analysts guide businesses and individuals in decisions about expending money to attain profit. They assess the performance of stocks, bonds, and other types of investments.
What are the 3 types of financial analysis?
Financial accounting calls for all companies to create a balance sheet, income statement, and cash flow statement, which form the basis for financial statement analysis. Horizontal, vertical, and ratio analysis are three techniques that analysts use when analyzing financial statements.
What are the three most common tools of financial analysis?
The three major tools for financial statement analyses are horizontal analysis, vertical analysis, and ratios analysis.
Importance of financial analytics
Financial analytics can help companies determine the risks they face, how to enhance and extend the business processes that make them run more effectively, and whether organizations’ investments are focused on the right areas. Advanced analytics and its ability to leverage big data will enable organizations to rethink their strategies for solving problems and supporting business decisions. Analytics can also help companies examine the profitability of products across various sales channels and customers, which market segments will add more profit to the business and what could have an impact on the business in the future.
Key types of financial analytics
Examining financial and other relevant information, financial analytics offers various views of companies’ past, present and future performance. The following are key types of analytics that can help companies of different sizes:
- Predictive sales analytics may include the use of correlation analysis or past trends to forecast corporate sales.
- Client profitability analytics helps differentiate between clients who make money for a company and those who don’t.
- Product profitability analytics entails assessing each product individually, rather than establishing profitability overall at a company.
- Cash-flow analytics employs real-time indicators, including the working capital ratio and cash conversion cycle, and may include tools such as regression analysis to predict cash flow.
- Value-driven analytics assesses a business’ value drivers, or the key “levers” the organization needs to pull to achieve its goals.
- Shareholder value analytics, which is used to tally the value of a company by examining the returns it provides to shareholders, is used concurrently with profit and revenue analytics.
Financial analytics software programs
As the way information is now collected and analyzed presents a significant shift — along with new challenges — software can help reduce the complexity. Financial analysis software can speed up the creation of reports and present the data in an executive dashboard, a graphical presentation that is easier to read and interpret than a series of spreadsheets with pivot tables.
Popular financial analysis software programs include:
- Oracle Financial Analytics — modular component of Oracle’s integrated family of business intelligence software applications. Enables insight into the general ledger, provides visibility into performance against budget and the way staffing costs and employee or supplier performance affects revenue and customer satisfaction.
- SAP ERP Financial Analytics — helps organizations define financial goals, develop business plans and monitor costs and revenue during execution.
- SAS Business Analytics — provides an integrated environment for data mining, text mining, simulation and predictive modeling — a mathematical model that predicts future outcomes — as well as descriptive modeling, a mathematical model that describes historical events and the relationships that created them.
- IBM Cognos Finance — provides out of the box data analysis capabilities for sales, supply chain procurement and workforce management functions.
- NetSuite — provides financial dashboards, reporting and analytic functions that allow personal key performance indicators to be monitored in real time.
- MATLAB — allows developers to interface with programs developed in different languages, which makes it possible to harness the unique strengths of each language for various purposes.
What is Financial Analytics Software?
Financial analytics software carries out robust data analysis on investment-related data sets. Investment managers use these solutions to pull all investment portfolio data and then query and manipulate it to answer investment-related questions.
Investment and fund managers leverage financial analytics software to build reports, identify potential investment opportunities, and vet those opportunities. Financial analytics software often offers customizable tagging features that allow users to tag and store data in whichever way they need. Investment professionals use solutions in this category to evaluate past investment decisions, monitor current holdings, and strategize future investments.
Financial analytics software is a part of the financial services software ecosystem. These applications often import investment data from third-party sources.
To qualify for inclusion in the Financial Analytics category, a product must:
Contain financial data aggregation capabilities
Build investment portfolio reports
Track investment portfolio performance with segmented filtering
Provide investment attribution functionality
Common Financial Analytics Software for 2022
Asset-Map is a Software-as-a-Process application for asset management and investment. Analysts can use Asset-Map to create highly customized, design-focused presentations that help them make better financial decisions.
Asset-Map is typically part of the financial planning engagement process. Asset-Map is utilized by thousands of professionals throughout the world and has mapped more than 1 million individuals and $1.4 trillion in financial assets.
This comprehensive and scalable application satisfies a wide variety of financial planning requirements. The platform helps to develop your business with its innovative planning software.
Using appropriate account statements and the ReadyRatios SaaS solution, you can easily determine the financial health of your company. In order to get real-time analysis, businesses only need to input the system with financial reports generated in accordance with UG GAAP or IFRS. Organizations can know their actual financial situation, as it computes and describe more than 40 rates and coefficients.
Even if statements are based on the same data, ReadyRatios’ multiple-choice conditional text module preserves the individuality of each report. Large tables can be condensed into compact charts with this tool without affecting the information’s integrity or accuracy in any way.
( Also Read: What Is Financial Analytics? )
Developed to handle all of your company’s reporting and financial analysis needs, Fathom is easy-to-use financial management software. This tool provides a variety of in-depth analytics metrics that enables users to see precisely how well their business performs and progresses, observe trends, and discern improvement opportunities. MYOB, Excel, QuickBooks, and Xero are all integrated smoothly into Fathom software to provide users with detailed dashboards and insightful reports. This tool eliminates the need for cumbersome spreadsheets by allowing users to generate visually appealing and insightful business reports and analyses.
RightCapital, which was founded in 2015, is one of the fastest-growing financial planning tool with the highest levels of satisfaction among financial consultants. Financial planning has become easy thanks to its innovative and user-friendly features. From tax-efficient distributions and interactive retirement scenarios to student loan management to insurance evaluation, and estate planning, it simplifies financial planning so that everyone can understand how to better strategize for the future.
Multi-unit, nonprofit, franchising, and banking sectors can benefit from the business intelligence, financial consolidation, and reporting capabilities of Qvinci. Individual users can equally benefit from the software’s ability to provide real-time actionable data. It has active accounting software connections with Xero, Excel, MYOB, QuickBooks, and other programs. A variety of reports can be generated by Qvinci, including balance sheet, profit and loss, and cash flow. A PDF file can be created by combining multiple reports.
Security is a priority for the software’s creators. As a result, administrators can provide different levels of access permissions to employees and managers based on their position within the company.
Pepper is a cloud-service investment data software that supports the decision-making infrastructure of investment managers. It includes a complete set of features that allow investment managers to generate a single golden source of data for all of their operational needs, compliance reporting, investor reporting, as well as analytics.
This cutting-edge digital data platform helps fund managers execute transactions quickly, accurately, and confidently. As each manager has their own distinctive fund structure and transaction flow, this financial service platform has been designed to be flexible and easy to customize so as to meet the evolving needs of credit funds, private equity funds, fund of funds, investment banks, family offices, and M&A advisory firms.
- Altvia Answers
Timing is essential, and private equity (PE) firms must obtain an advantage in information in order to successfully compete for financing and deals. Altvia Answers is an end-to-end private equity business intelligence solution that connects to, converts, normalizes, and displays all of your data across platforms, making it easy to execute complex analysis at any point in time.
Altvia Answers gives data analytics to businesspeople without the assistance of IT, in order to answer the questions, you already know you have as well as those you haven’t discovered yet. As an all-encompassing solution, it eliminates error-prone processes and gives your company the ability to stand out in the marketplace by combining all of your data into a single source of truth.
The runway is a cash planning tool that assists companies in better identify, managing, and extending their business-relevant financial runway. It allows brands to get an accurate picture of their cash flow. Using Runway, even if users are unable to work with spreadsheets, they can still understand how their expenses have influenced the company’s cash burn.
In a matter of seconds, the tool may be used to create visually appealing charts. Users may see anticipated cash balances, net monthly gains or losses, and changes in burn rates on these graphs, as well as the most expensive months.
IndustryCFO is a financial analytics software that gives its customers excellent business intelligence solutions and ensures a successful outcome for their business ventures. Not only do business advisers have access to the platform’s intuitive expertise, but so do business owners and company executives alike.
It also provides valuable insights to help businesses grow in the form of analysis, reports, suggestions, and KPIs that are easy to understand. There is a Business Performance Scoreboard in the application that shows the financial health of a business and how to improve it.