Financial Analytics What is Financial Analytics?? Financial Analytics is a concept that provides different views on the business’ financial data. It helps give in-depth knowledge and take strategic actions against them to improve your business’ overall performance. Financial analytics is a subset of BI (Business Intelligence) & ERP (Enterprise Resource Planning) and has an impact on every aspect of your business. It plays a crucial role in calculating your business’ profit. It helps you answer every business question related to your business while letting your forecast the future of your business.
Types of Financial Analytics Predictive sales analytics: The businesses that are harnessing the power of big data predictive models are finding that they are able to gain valuable insights about the state of their sales pipeline. Predictive models can help businesses anticipate what their clients’ needs will be, develop targeted & lead-generating campaigns. Client Profitability Analytics: It allows businesses and lenders to determine the profitability of each customer or segments of customers, by attributing profits and costs to each customer separately. CPA can be applied at the individual customer level or at the level of customer aggregates / groups. Product profitability analytics: Product Profitability Analysis allows you to forecast the profitability of new products you are planning to market and to optimize the profitability of existing ones. Therefore, it can firstly help you identify the most and least profitable existing products and clients.
Secondly, this analysis allows you to isolate and solve issues that can affect your profit margins by providing your company essential knowledge to adjust one product mix to maximize profitability. Cash-flow analytics: It is a method for examining how a business generates and spends money over a specific period of time. It can help you figure out where your money is going and how much cash you have available at a given moment. Value-driven analytics: It helps to create a clear definition of business value. It also helps organizations to assess their current level of maturity and define a metrics driven path to achieve business value realization and sustainable competitive advantage. Shareholder value analytics: It is a precise calculation of your company or organization's value in the public market. This analytical tool assesses the returns you make to your shareholders and measures the financial pros and cons of your strategies.
Financial Analytics Tools Financial Analysis Tools are one of the most efficient ways that can be used for ensuring good profit from your investments. These financial analysis tools are highly helpful in evaluating the market and investing in a way so as to maximize the profit from the investments made. Some of the tools are Balanced Scorecard, Benchmarking, Ratio Analysis, Trend Analysis, Comporative Financial Statement Analysis, Common Size Statement Analysis or Vertical Analysis
Importance of Financial Analytics • Today’s businesses require timely information for decision-making purposes • Every company needs prudent financial planning and forecasting
• The diverse needs of the traditional financial department, and advancements in technology, all point to the need for financial analytics. • Financial analytics can help shape up the business’ future goals. It can help you improve the decision-making strategies for your business. • Financial analytics can help you focus on measuring and managing your business’ tangible assets such as cash and equipment. • It provides an in-depth insight into the organization’s financial status and improves the cash flow, profitability, and business value.
Software for Financial Analytics The software used for Financial Analytics are SAS Business Analytics, SAP ERP Financial Analytics, MATLAB, Oracle Financial Analytics, NetSuite, IBM Cognos Finance etc.
If you are interested to know more about the financial analytics, join the Financial Analytics Course by Henry Harvin®.