FINANCIAL ANALYTICS

Submitted by
Annie
S3 MBA
Meaning

Financial analytics is the field that provides high- and granular-level views of a
company's financial data, helping to improve its business performance.
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 & EPM 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
Importance of financial Analytics
 Types of financial analysis
• Horizontal analysis refers to the side-by-side comparison of an organization's financial performance
for consecutive reporting periods. The aim is to determine major shifts in the data. Later, this
information could be applied to a more detailed analysis of financial results.
• Vertical analysis pertains to the proportional analysis of a financial statement. Each line item on a
financial statement is listed as a percentage of another item -- for example, every line item on an
income statement is provided as a percentage of gross sales, while every line item on a balance
sheet is given as a percentage of total assets.
• Short-term analysis provides a detailed review of working capital, involving the calculation of
turnover rates for accounts receivable, inventory and accounts payable. Any differences from the
long-term average turnover rate should be studied further because working capital is a significant
user of cash.
• Multi-company comparison entails tallying and comparing major financial ratios of two
organizations, usually in the same industry sector. The aim is to determine the companies' relative
financial strengths and weaknesses.
• Industry comparison contrasts the results of a specific business and the average results of an entire
industry. The purpose is to determine any unusual results in comparison to the industry average.
 Key types of Financial Analytics
• Predictive sales analytics may include the use of correlation analysis or past trends to forecast
corporate sales.
• Client profitability analytics helps differentiate between clients who make money for a company
and those who don't.
• Product profitability analytics entails assessing each product individually, rather than
establishing profitability overall at a company.
• Cash-flow analytics employs real-time indicators, including the working capital ratio and cash
conversion cycle, and may include tools such as regression analysis to predict cash flow.
• Value-driven analytics assesses a business' value drivers, or the key "levers" the organization
needs to pull to achieve its goals.
• Shareholder value analytics, which is used to tally the value of a company by examining the
returns it provides to shareholders, is used concurrently with profit and revenue analytics.
 Financial analytics software programme

• Oracle Financial Analytics is the modular component of Oracle's integrated family of business
intelligence software applications. It enables insight into the general ledger and provides visibility
into performance against budget and the way staffing costs and employee or supplier
performance affects revenue and customer satisfaction.
• SAP ERP Financial Analytics helps organizations define financial goals, develop business
plans and monitor costs and revenue during execution.
• SAS Business Analytics provides an integrated environment for data mining, text mining,
simulation and predictive modeling -- a mathematical model that predicts future outcomes -- as
well as descriptive modeling, a mathematical model that describes historical events and the
relationships that created them.
• IBM Cognos Finance provides out-of-the box data analysis capabilities for sales, supply chain 
procurement and workforce management functions.
• NetSuite provides financial dashboards, reporting and analytic functions that allow personal 
key performance indicators to be monitored in real time.
• MATLAB allows developers to interface with programs developed in different languages, which
makes it possible to harness the unique strengths of each language for various purposes.
Importance

• Today’s businesses need timely information that helps the business people to make
important decisions in business.
• Every business should have sound financial planning and forecasting to leverage the
business.
• The emergence of a new business model,  the changing needs of the traditional
financial department, and technological advancement have all led to the need for
financial analytics.
• Financial analytics helps in shaping up tomorrow’s business goals. You can also
improve the decision-making strategies of your business.
• Financial analytics focuses on measuring and managing the tangible assets of an
organization such as cash, machinery and others
• It gives a deeper insight about the financial status of your business and improve the
profitability, cash flow and value of your business.
• Financial analytics will help in making smart decisions to increase the business revenue
and minimize the waste of the business
• Accounting, tax and other areas of finance are having data warehouse which is
combined with analytics to effectively run the business and achieve the goals faster.
THANK YOU