How to Learn Financial Analysis From Scratch [Step-by-Step] 2024

Do you want to know How to Learn Financial Analysis From Scratch?… If yes, you are in the right place. In this blog, I will share a step-by-step roadmap to Learn Financial Analysis From Scratch. Along with that, I will also share some best resources to learn Financial Analysis.

So, let’s get started and see How to Learn Financial Analysis From Scratch–

How to Learn Financial Analysis From Scratch?

Table Of Content

Why Does Financial Analysis Rock?
Step 1: Get the Basics Right
Step 2: Tools You Need
Step 3: Try It Out
Step 4: Keep Learning
Step 5: Show Off Your Skills
Step 6: Resources to Learn Financial Analysis
How to Learn Financial Analysis for Free?
Conclusion
FAQ

So, we’re gonna talk about money and why it’s important to know a bit about it. Imagine this: you’re the boss of your own wallet, and you want to make sure you’re doing things right. That’s where financial analysis comes in – it’s like your pocket-friendly tool to understand what’s happening with your money.

Why Does Financial Analysis Rock?

Okay, so why should you care about this financial analysis thing? Let me break it down:

1. Making Smart Choices

It helps you make good decisions. Like, if you have a little business or you’re thinking of investing, financial analysis is like your helper. It guides you so you don’t do something silly.

2. Avoiding Money Troubles

Life is full of surprises, right? Financial analysis is like your buddy who helps you see potential money problems before they become big headaches.

3. Checking Up on Businesses

Ever wondered how well a company is doing? Financial analysis is like a checkup for businesses. It tells you if they’re in good shape or if they need a bit of fixing.

4. Investing Made Easy

If you’re into putting your money into things, financial analysis is like your superpower. It helps you figure out if a company is worth investing in. No guessing games!

5. Sorting Your Own Money

Financial analysis isn’t just for big shots. It’s handy for your own money too. Wanna save for something big, check your credit, or plan a budget? Financial analysis is your go-to friend.

6. Getting Loans the Smart Way

Dreaming of a new ride or a cozy home? Financial analysis helps the people who lend you money decide if you’re good at paying it back. Plus, it helps you get better deals.

7. Making Simple Plans

Businesses like to plan stuff out, right? Financial analysis is like their not-so-secret tool. It helps them set goals, spend money smartly, and stay strong for the long run.

Now, as we start learning about financial analysis step by step, remember, that we’re not getting into boring stuff. We’re gaining a kind of superpower to handle money better. Now, let’s see the step-by-step roadmap to learn Financial Analysis–

Step 1: Get the Basics Right

Know the Simple Stuff

Financial analysis might sound complex, but let’s start with the basics. It’s like building a house – you need a strong foundation. Here are the main things to know:

Income Statement: Your financial report card, shows what you earned and spent over time.
Balance Sheet: Like a snapshot of your money’s health at a specific moment, including what you own and owe.
Cash Flow Statement: Tracks the money coming in and going out.

Understand Money Words

Before jumping into the fun stuff, let’s learn some money words. It’s like picking up a new language. Here are a few terms to get you started:

Return on Investment (ROI): How much you get for your money.
Earnings Per Share (EPS): A company’s profit divided by its shares.
Liquidity: How easily things can be turned into cash.

Topics to Learn in Financial Analysis

Here’s what to focus on in this step:

Income Statement Analysis: Break down revenue, expenses, and profits.
Balance Sheet Analysis: Understand assets, liabilities, and equity.
Cash Flow Analysis: Grasp how money moves in and out.

Step 2: Tools You Need

Master Spreadsheets

Excel or Google Sheets will be your buddies. Learn the basics like functions and formulas. Create tidy, easy-to-read spreadsheets.

Use Ratios (They’re Not Scary)

Ratios are like secret codes in financial analysis. They help you understand the numbers better. Start with these:

Current Ratio: Checks if a company can cover its short-term bills.
Debt-to-Equity Ratio: Measures how much a company owes compared to what it owns.

Topics to Learn in Financial Ratios

Dive into these topics:

Liquidity Ratios: Check a company’s ability to cover short-term debts.
Profitability Ratios: Understand how well a company is making money.

Step 3: Try It Out

Look at Real Examples

The theory is cool, but let’s do the real thing. Check out reports of companies you like. Spot patterns and trends. You can find these reports online, like on the SEC’s EDGAR database.

Connect Online

Join online groups of money lovers. Platforms like LinkedIn or money forums are great for chatting about real money problems and learning from others.

Step 4: Keep Learning

Stay Updated (It’s Fun, Promise!)

The money world has changed a lot. Follow money news online, check out leaders on social media, and join webinars or workshops. Learning all the time keeps your skills fresh.

Take Online Classes

There are awesome classes online made for beginners. Places like Coursera, Udemy, and Khan Academy have classes on financial analysis. Use them to get even better at this stuff.

Topics to Learn for Continuous Improvement

Keep your learning journey going:

Industry Analysis: Understand specific sectors and how they impact finances.
Macroeconomic Factors: Know how big-picture economic stuff affects finances.

Step 5: Show Off Your Skills

Practice, Practice, Practice

Now that you know your way around, try it out. Make a pretend money portfolio and see how it goes. This hands-on practice will make you better at understanding money.

Ask for Help

Don’t be shy. Share your money with mentors or online friends. Getting good advice helps you get even better.

Step 6: Resources to Learn Financial Analysis

Financial Analysis – Skills for Success Specialization– Coursera
Finance & Quantitative Modeling for Analysts Specialization– Coursera
Business and Financial Modeling Specialization– Coursera
Artificial Intelligence for Trading– Udacity
Business Analytics Specialization– Coursera
Machine Learning for Finance in Python– DataCamp
Financial Management Specialization– Coursera
Python & Machine Learning for Financial Analysis– Udemy
Valuation and Financial Analysis For Startups Specialization– Coursera
Think like a CFO Specialization– Coursera

How to Learn Financial Analysis for Free?

Week	Topic	Learning Tasks
1	Introduction to Finance	– Explore basic finance concepts online.
		– Watch introductory videos on financial fundamentals.
		– Read articles or blogs about the importance of financial analysis.
2	Understanding Financial Statements	– Learn to read income statements, balance sheets, and cash flow statements.
		– Practice analyzing financial statements of companies.
3	Financial Ratios and Analysis	– Understand key financial ratios (liquidity, profitability, leverage).
		– Analyze and interpret financial ratios of real-world companies.
4	Introduction to Excel for Finance	– Learn basic Excel functions and formulas.
		– Practice creating simple financial models in Excel.
5	Valuation Methods	– Explore different valuation methods (DCF, Comparable Company Analysis).
		– Apply valuation techniques to assess the value of companies.
6	Financial Modeling Basics	– Understand the basics of financial modeling.
		– Build a simple financial model for a hypothetical scenario.
7-8	Advanced Financial Modeling	– Deepen financial modeling skills with more complex scenarios.
		– Explore online tutorials and case studies for advanced modeling.
9	Real-world Application	– Analyze financial reports of publicly traded companies.
		– Join financial forums or communities for discussions and insights.
10	Review and Practice	– Recap key concepts and review challenging topics.
		– Engage in practical exercises and case studies.

Conclusion

In this article, I have discussed a step-by-step roadmap on How to Learn Financial Analysis From Scratch. If you have any doubts or queries, feel free to ask me in the comment section. I am here to help you.

All the Best for your Career!

Happy Learning!

FAQ

How do I get into financial analysis?

To become a financial analyst, start by getting a degree in finance, accounting, or economics. Gain practical experience through internships or entry-level roles, focusing on analyzing numbers and financial statements. Learn essential tools like Excel and financial modeling. Consider certifications like the CFA for credibility. Connect with industry professionals, stay updated on finance news, and create a strong resume and LinkedIn profile. Apply for financial analyst positions and keep learning for ongoing success in the field.

How long does it take to learn financial analysis?

Learning financial analysis takes time, and how long exactly depends on you. Getting the basics might take a few months, while becoming really good could take a year or more. It’s important to keep learning and practicing to get better over time.

How do I learn analytical skills in finance?

To learn analytical skills in finance, start by practicing with real-world examples. Analyze financial statements, work on quantitative projects, and use tools like Excel for data analysis. Take relevant courses or workshops, and seek internships or entry-level positions in finance to gain hands-on experience. Additionally, stay curious, ask questions, and learn from experienced professionals in the field.

What is the CFA salary?

The salary for Chartered Financial Analysts (CFA) varies depending on factors like experience, location, and industry. On average, CFAs can earn a competitive salary ranging from $70,000 to $120,000 annually. However, senior-level professionals or those in high-demand sectors may earn even higher salaries, exceeding $150,000 or more.

Which course is best for financial analysis?

Financial Analysis – Skills for Success Specialization– Coursera is the best course for financial analysis. In this 3-course Specialization on Financial Analysis, you will learn important things for making a business successful, whether it’s big or small. The courses are designed to help you understand the key financial ideas that are like building blocks for a successful organization.

Is a financial analyst a good job?

Yes, being a financial analyst is usually seen as a good job. It pays well, provides chances to move up in your career, and lets you work in different industries. Financial analysts help businesses make important decisions, and there are satisfying roles in areas like investment analysis and financial planning.

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Though of the Day…

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– John Wooden

Written By Aqsa Zafar

Founder of MLTUT, Machine Learning Ph.D. scholar at Dayananda Sagar University. Research on social media depression detection. Create tutorials on ML and data science for diverse applications. Passionate about sharing knowledge through website and social media.