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Financial Analytics for Forecasting and Decision-Making

Translating raw data, financial statements and reports into insights that allow for accurate business forecasting and risk management falls under the field of financial analytics. As the benefits of employing financial analytics as a tool to assess risk become more widely known, more businesses are employing predictive analytical techniques.

Financial Analytics as a Tool for Effective Risk Management

A 2018 Forbes article outlines a poll of more than 670 senior finance leaders and CFOs across the world who were asked to rank primary managerial concerns when it comes to risk. Topping the list, managers noted that a lack of data and information to uncover risks and a lack of systems and technology to simplify the audit process. In other words, the top concerns facing many businesses could be addressed through allocating proper resources to financial analytics. The Forbes article states:

"Risk analytics ... can provide a unique opportunity to understand key risks, from real-time portfolio monitoring to using machine learning algorithms to identify high-risk customers."

Understanding analytics can help put companies ahead of the competition by connecting data such as financial data, customer data, social media data, and other abstract data. These data connections can help firms create competitive strategies to improve organizational performance. Additionally, the Forbes article notes that predictive analytics helps to “evaluate patterns within different types of data;” thus providing potential new insights that inform managers about how meet a variety of stakeholder demands.

Analytics skills are in high-demand and the University of South Carolina (USCA) can help you acquire much needed analytics skills. Be sure to keep these Specialization options on your “To-Do” list! Still not convinced that you might want these skills? Here’s are some career options that might be available for you with a USCA Finance Specialization.

6 Key Financial Analytics Career Options

A 2017 article in Forbes listed six financial analytics fields that every business should be familiar with.

  1. Predictive sales analytics is a tool for developing sales forecasts and predictions. The technique employs the use of past data and correlation analysis. Predictive sales analytics help businesses navigate financial ups and downs.
  2. Customer profitability analytics differentiates between customers who make a business money and ones who cause a loss of income. Knowing the difference is key, the article says, to directing marketing efforts.
  3. Product profitability analytics helps businesses understand where money is being made versus lost. Insights gained from analyzing product sales help businesses direct investment while maximizing future growth.
  4. Cash flow analytics allows businesses to better understand their day-to-day expenses. Insights gained into operational costs can help businesses run more smoothly and can be a useful gauge of a business's overall health.
  5. Value driver analytics allows a business to have a better sense of its long-term goals. By examining the values that drive daily operations, businesses gain a better grasp of how to reach strategic objectives.
  6. Shareholder value analysts estimate a business's total value. A company's value and perceived value are not always aligned. Shareholder value analytics allows those differences to be measured.

Remember, the University of South Carolina Aiken online MBA with a Specialization in Finance offers a course in financial analysis for decision-making. Taught by USC Aiken faculty, this online course focuses on a company's operating, investing and financial activities, using financial analysis techniques to make real economics-based decisions. Topics such as financial concepts, financial case analysis, and financial problem solving are explored.

Translating abstract data into communicable predictions falls under the purview of financial analytics. The predictive analytical techniques are increasingly seen as an integral tool for achieving business success.

Learn more about the USC Aiken online Master of Business Administration with a Specialization in Finance program.


Sources:

Forbes: 6 Key Financial Analytics Every Manager Should Know

Deloitte: Finance Analytics: The Three-Minute Guide

Forbes: Global Finance Leader Study: How Finance Can Transform Risk Analytics for a Data-Rich World

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