• Apply now

Money in bank in 24 hours

Apply now

5 reasons why CAs should learn financial modelling

  • Highlights

  • Financial modelling-meaning and role

  • Promotes research-oriented mindset

  • Provide end-to-end financial consultancy

  • Insights on the financial health of the company

The Chartered Accountant qualification is one of the highest forms of degrees in India acquiring which takes hard work and relentless dedication from students. In order to be in pace with the changing times, companies have incorporated the data management system as a result of which financial modelling has become the foundation stone in carving a successful career in the corporate world, today.

Financial Model

A Financial model is a representation of a company’s financials. Financial models are typically used to dissect and analyse a company’s performance and make predictions about the company’s future.
Chartered Accountants need financial modelling for reasons that can be listed as under:

1. Acquiring research oriented mind set

Chartered accountants are trained well in the areas of accounting and taxation, but their approach tends to become mechanical.

However financial modelling trains them to read beyond the financial statements and in between lines. It helps to develop an analytical mind set which is very important in the field of investment banking, equity research and financial analysis.

2. Provide end-to-end financial consultancy

If you learn financial modeling, it will enable your firm to offer a range of solutions like investment banking, equity research, fixed income research, risk management, credit rating, portfolio analysis, etc. This widens your role from being only an auditor, accountant or a tax consultant to being a financial partner of your clients where you help them take important financial decisions.
No matter if you have to value a company, analyse a merger/acquisition, take a company IPO, and issue shares – the foundation of all this is a detailed understanding of financial modelling.

3. Management Reporting

Management reporting includes preparation of financial reports, handling risk and regulatory, and reconciliations. Professionals involved in management reporting are accountable to both finance and business team, and therefore, they need to be accurate in their forecasting and planning, which can only be done with the help of financial modeling.

4. Get insights on a company’s financial performance and working

Advanced financial modeling will help you learn the fundamentals of how a company works. Once you understand this thoroughly your scope for growth in corporate finance is virtually limitless. For example, you will learn that “revenue” is not just a 1-line item in an income statement, but a roll-up of 10-20 different items such as sales pipeline, probability of sales conversion, sales channels, ARPU (average revenue per user) etc.

While Financial Modelling is no substitute to CA course, for professionals who want to acquire analytical and forecasting skills, a certificate course in financial modelling from a reputed industry body gives them confidence and equips them with necessary skills to step into the research oriented roles. For the smooth financing of such career upgrades, today a wide variety of lending options like Chartered Accountant Loans are available in the market today.

Related Posts:

Opportunities & Challenges Faced by CA Firms
Ideal qualities of a Chartered Accountant
Articleship in CA

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?

Next up


How to use a Chartered Accountant loan to strengthen your practice