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Top 4 Finance Skills to get Finance Jobs after MBA
Updated: Jan 27, 2021
A career in finance is a dream for many and to make this dream come true, Arpit Lahoty, one of my batch mates at IIM Ahmedabad, has come forward to list down the top 4 finance skills required to get into finance jobs after MBA. Arpit has worked in financial due diligence and investment banking prior to his MBA, and will be joining McKinsey & Co. as a consultant.
In Arpit's Words:
Hey everyone! This article is an attempt to list down some of the skills required in the finance profession and some useful resources that can help you.
There are multiple career paths that one can choose within the finance field. Some of them are:
Commercial banking
Corporate Finance
Credit Analysis
Equity Research
Investment Banking
Private Equity & VC
Wealth Management
While all these profiles require varying skill sets and qualifications, there are a few basic skills which are common across many of these fields:
Financial Reporting & Analysis
Industry/Business Analysis
Valuation & Corporate Finance
Financial Modeling
Let's discuss them one by one.
Financial Reporting & Analysis
A large part of finance is understanding businesses, and in order to do that well, a sound knowledge of accounting is essential. While you may not need to know how to actually make financial statements, being able to read them and to draw inferences from them is an important skill to have.
There are several highly-rated courses on financial reporting available on Coursera, many of which are free unless you want a certificate of completion. The popular ones are:
Financial Accounting Fundamentals (offered by University of Virginia)
Introduction to Financial Accounting (offered by University of Pennsylvania)
Go through the course content and the expected time commitment for the 4-5 top-rated courses, and choose the one that best meets your requirements. However, do note that most of these courses do not go into a lot of depth, and are beneficial only if you are an absolute beginner.
If you want to understand how to read and interpret financial statements in more depth, books would be preferable. Some of the good and easy to understand books are:
How Finance Works (Mihir Desai)
Key Management Ratios (Ciaran Walsh)
Industry & Business Analysis
An excellent way to learn industry and business analysis is to go through equity research reports by leading brokerages – particularly ‘Initiating Coverage’ reports. IC reports provide a comprehensive analysis of industries and businesses.
Some of the reports can be found here: Trendlyne
There are also some groups on Telegram which provide access to equity research reports. Here’s the link to one of them: Equity Research Reports
Another great place is the ValuePickr forum. You can find several quality discussions on companies and industries here: ValuePickr Forum
And here’s a good place to scan through financials of listed companies as well as look through key ratios, peer comparisons etc: Screener
There are several other good books and blogs which deal with industry analysis. I have covered them in my other posts on this blog (links at the end of the post).
Financial Modeling
A financial model is simply a tool (generally built in Excel) to forecast a business’s financial future. It serves as one of the critical inputs for financial analysis and valuation. Knowing how to build an integrated 3-statement financial model and Discounted Cash Flow (DCF) model is a must-have skill for professions like equity research, investment banking and private equity.
I will divide the recommendations here in two parts. First, in case you want to learn financial modelling just to build or augment your skill-set. Second, in case you want to obtain a certificate of having gone through a financial modelling course to improve your chances of landing a finance role.
For the first case, if you are just keen on learning, I would suggest subscribing to A Simple Model. While there are a lot of free tutorials available online, what is actually needed is a structured approach to learning financial modeling, and ASM does a very good job at that. And for just USD 3 per month, it is very affordable too. They have a lot of material available for free in case you want to try them out first.
For the second case, in case you need a certification, there are several good options available. Some of the popular ones are Breaking into Wall Street, Imarticus, The WallStreet School, Corporate Finance Institute, EduPristine. Go through the course content and sample lectures/videos before deciding which course you wish to opt for. These are priced on the higher side – range from INR 5,000 to INR 40,000.
Most of these courses cover basics of Excel. In case the one you select doesn’t and you don’t have much experience using Excel, would suggest going through some course on Udemy. Here’s one highly rated course: MS Excel from Beginner to Advanced and Beyond. However, do look at the other courses as well, and pick the one which best meets your requirements.
Valuation & Corporate Finance
The most-commonly used and perhaps the best resource to learn about corporate valuations is Professor Aswath’s Damodaran’s writings and courses. Prof. Damodaran teaches at NYU, and is widely regarded as the authority on valuation and corporate finance.
You can either go through his video lectures or you can read his books.
For video lectures, you can either see his full lectures (classroom lecture recordings) or smaller condensed lectures. I feel that the latter are enough to understand the basics, and you can watch the former if you want to see the principles being applied. If you are just starting out, the smaller lectures are advisable:
If you prefer books, Damodaran on Valuation is an excellent book. A relatively lesser known book which I found really useful is Valuation: Measuring and Managing the Value of Companies by McKinsey & Co. I believe it does a much better job of tying in valuation with overall business strategy. If you just want to cover the basics, The Little Book on Valuation by Damodaran is a good book to consider.
How Finance Works by Mihir Desai (mentioned earlier) gives a good introduction to corporate finance.
Listing down a few blogs which deal with careers in finance:
Hope you find this post on the top 4 finance skills for finance jobs as a resourceful repository for your MBA journey and beyond. I'd really like to thank Arpit Lahoty for taking out his valuable time to share the relevant links for finance enthusiasts. I'd also like to share with the blog members how inspired I am by Arpit's interest in the finance domain, I admire him for his depth of knowledge in the finance sector.
Arpit also writes a blog covering topics related to business, finance and technology at Marginal Futility. You can follow his blog to remain updated about the field of finance and business.
His other articles @Non-engineers: