Questions on corporate finance/finance departments

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#1

Hello

I have some questions if you dont mind.

I am soon finishing my accounting and finance degree in europe. I am interested for european job market aswell.

1 question.

I heard the general finance division is like this

controller head of accounting

treasurer head of cash management and risk management

financial planning & analysis/management accounting director head of budgeting and pro forma income statement

all three report to cfo

and internal audit, reports straight to the board committee examining the profitability of the business as a whole.

Is this model accurate?

  1. Is a master in accounting a good choice for the previous jobs?

3)is the fp&a analyst, the same with the financial analyst in investment firms? (hedge funds, mutual funds and so on)

  1. in those parameters is a ACCA or CFA more useful? I am leaning towards controllership and fp&a type of jobs.

  2. is the fp&a role good for promotions in general management?

  3. Generally i listen that corporate finance jobs, are the finance department of the company, and financial advisory by banks (mergers, leveraged buy in-out, restructuring and so on) True , false?

  4. are master in statistis or in finance useful if i want to work in jobs of 1?

thanks, sorry for the long post

#2

For question #3

The FP and A analyst in a corporate job is VERY different from a financial analyst at an investment department

As an FP and A analyst, my job is to help the company make predictions on how much money they earn, to explain variances after the fact, and help design budgets for next year. My job is **not*** to see whether we should be taking our extra cash and investing it into Google.

A financial analyst at an investment-based company is going to evaluate what securities they should put their clients’ or their own money into.

#3

Excuse my lack of specific knowledge, i try to understand not to be “smart”, arent they fundametal the same?

I know the technical side should be different due to complexity of each job, but in both sides you make a capital budget, wether its a product portfolio or a security portfolio, after all, risk, cash flows and discounts isnt all you care about?

As far as i can see, the investment side, has more complex pricing models? Or something similar, but in the end, making budget of which product we should invest versus which stock, the idea is same, with different number crunching

#4

No. FP&A corporate gigs are totally brainless. It’s usually a huge dept of people who do nothing, just churn out template reports, over/under budget, etc. There might be one smart person in the whole dept who does the serious work, but other times they have someone in a different department do the serious work, and they just “report on it”. :wink:

#5

Ok, so the serious person, what exactly does he do? Scenario analysis and simulations on the cash flows of each investment?

And the investment-firm financial analyst? I know he has an asset class, bonds, stocks whatever. What does he do? Fundamentals and financial statement analysis?

Also is indeed management accountant same with fpa analyst at non investment firm?

#6

Hmm I think the above description would be too mathy. FP&A people are generally accountants, who dabble lightly in “analysis”. There are financial metrics, and they just pull the data during the year, and report over/under budget. Each year they construct a new budget. They might also do work on materials for the financial statements. Yes, there might be a serious person in the dept who actually gets mathy and tries to seriously model out cash flows for the upcoming year, runs scenarios, probability weighting. But, a lot of times they just do prior year x some made up number to arrive at next year. The corporate title might be “managerial accounting analyst”, or some strange thing.

Well jobs vary widely. He might be called “investment analyst”, where you look at a specific investment type (I did fixed income for years, running rate shock models and such), or “financial analyst” where you work on the finance behind fund structures / investment vehicles (I did this for a VC), or whatever there are so many types of jobs. But the point is FP&A is generally a very different kind of thing, more “accountant-like”.

Also you asked about a masters in accounting. That would be a great thing for a Director of FP&A role, or Director Internal Audit.

#7

Ok i am starting to understand

So the fpa is more like capital budgeting and maybe if he is good, some NPV scenarios

While investment analyst is mainly concerned with asset pricing models?

Also you say the investment analyst is more mathy, how mathy? Basics stats mathy, or quant-background mathy?

Example, I have 2 stats and 1 econometrics classes, will it be enough for it?

I have read a corporate finance analyst, may be sometimes, a light investment banker inhouse. Is this true?

#8

I would work on my English before I worried about any of this.

#9

English is not my native, nor it is the language in the country i live in.

Also i cant perceive language comments in any kind way, so excuse my defensive way of talking,

1 Like
#10

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#11

investment analysts are more broad, news affecting share performance, u wanna kno typical multiples for several indsutries. margin differences difference in strategies. its not advanced math, id argue that fpa is more excel, pivot crap. while investment analysts get the bottom line imp numbers and communicate more qualitatively with quantitative know how.

fpa is more project specific, roi. what do we report to our investors etc. fpa is in no way an investment banker. i-bankers raise capital from investors. these people dont. they give visbility to management with business metrics. with that said my sister is in FP&A, its kinda nice to have, cuz i learned abotu what FP&A does to make their shit look better. i would say they are like the smarter accountants.they run a lot of macros, create a lot macros to compile their business crap.

so bottom line FPA guides management. management executes what they want. investment analysts rate management strategies. portfolio managers buy analyst recommendations. and the 1% decide which pms they want. the circle of life.

#12

Thanks, very helpful and detailed.

#13

No, an FP&A analyst is not doign NPV or capital budgeting. Theyre literally just checking the revenue, cost performance of the project throughout the year and identify areas that are making the P&L worse and other areas where they are making it better.

Think of it this way, the corproate development team isolates an investment opportunity (does the valuation). Once the project is underay, the FP&A will report the over/under the budget intially created by the corp dev team.

They will find areas that are doing better than plan and areas that are doing worse than plan. Theyll report back these findings to corproate or the leadership group overseeing the project.

It’s a pretty thankless job.

#14

Also worth noting FP&A is an area that is likely to shrink over time as reporting is automated by big data analytics

#15

Interesting. I always thought FP&A was capital budgeting. Which department does capital budgeting, then?

#16

Varies by company but I always thought it was the Corp Dev teams who analyze where to deploy capital.

#17

hmm. Well i know several places where “corporate development” means M&A. It might vary by company, exactly what all the departments do

#18

basically the smaller the company. the more all encompassing fp&a is likelt to be. large companies hire specialists.

#19

So fundamentally one could say that they are in general fpa umbrella and some coprorations create different departments?

I mean its like “finance professionals”, the average person may mean an accountant. or a portfolio manage or a financial analyst. To the insiders the differemces are huge, but fundamentally the professions are very similar.

#20

You would think, but everywhere I’ve been the real financial analysts did that job. The FP&P people were just accounting/reporting.