Financial planning and analysis (FP&A) is one of the primary functions of corporate finance, and FP&A analysts are specialized in executing the various activities it requires. FP&A professionals provide a significant amount of support and play a critical role in the decision-making process of the CEO, CFO, and the Board of Directors. 

It is one of the critical and most impactful groups in any organization, and successful businesses understand the value of financial planning and managing cash flow. This FAQ will provide insight into what FP&A analysts do, why they are important, and some of the common duties of FP&A professionals.

What Is An FP&A Analyst?

An FP&A Analyst is a type of financial analyst that focuses their efforts on the execution of financial planning and analysis. FP&A analysts execute on the tasks required to perform analysis, planning, forecasting, and reporting. 

One of the reasons corporate FP&A analysts are so highly valued is their ability to perform both qualitative and quantitative analysis. This is an important quality that all FP&A professionals work hard to foster and develop throughout their careers. 

Qualitative Analysis

Qualitative analysis is the practice of evaluating an investment or business opportunity using non-quantifiable methods. Qualitative analytics are used to identify how things like packaging, expertise of management, and employee morale impact the potential success of a business. The use of qualitative analysis is an important factor when analyzing any investment opportunity and a good FP&A analyst will be able to perform this type of analysis with some degree of confidence.

Quantitative Analysis

Quantitative analysis relies on information found in financial statements, or by other quantifiable and mathematical means. This is the primary type of analysis that is conducted in corporate finance and it requires that analysts are competent in understanding how to read and interpret financial statements. 

Why FP&A Analyst Are Important

FP&A analysts are responsible for the oversight of a broad scope of financial affairs that includes revenue management, expense management, tax management, capital expenditures, investment analysis, and financial statement analysis. 

This is different from accounting professionals that are primarily concerned with record-keeping and financial statement production. FP&A analysts are tasked with examining, analyzing, and evaluating the entire financial ecosystem of the business.

Because FP&A analysts are so entrenched in the various financial activities of the company they are extremely knowledgeable on almost all aspects that impact the business. They are well versed in fielding data requests and assisting with the decision-making of virtually every department in an organization. 

Trends towards the implementation of xP&A are further expanding the responsibilities and duties of corporate FP&A analysts.

Common Duties Of FP&A Analyst

Many corporate finance departments wear different hats and are required to have a deep understanding of the entire enterprise. This usually results in job descriptions that are somewhat dynamic and different depending on the size and industry of a business. While this is not an exhaustive list, some of the more common responsibilities of FP&A analyst include:

Evaluating Best Use Of Resources

This is the analysis of a business’s use of current assets and liabilities to determine if it is yielding the most optimal results.  Typically analysts will review return on investment and cash flow information to understand if the use of excess working capital is ideal or requires improvement.

Monitoring Financial Health

This typically includes calculating and analyzing certain financial ratios that help indicate liquidity or solvency. These ratios include debt-to-equity, current, and interest coverage ratios, but can include others as well. 

Evaluating Net Profit And Profit Margin

The distinction between net profit and profit margin is important as the products that have the highest profit margin might not be those that generate the most total profit. Because of this, FP&A analysts work to identify which products not only have the highest profit margin but also which mix of products leads to the highest total profit.

Budgeting And Forecasting

One of the primary functions of FP&A analysts is to conduct the process of gathering information for and building the corporate budget. This requires that analysts work with various departments to build their budgets as well.

Internal Reporting

FP&A analysts typically prepare a variety of management reports that cover basic variance analysis, and budget forecasts to more complex and dynamic reporting. Because each industry has its own unique aspects, corporate FP&A teams are often involved in the creation of bespoke financial and performance reports. These reports are then used by management for various types of decisions outside of the normal reports created as part of the CPM process.  

Using DataRails, a Budgeting and Forecasting Solution

DataRails replaces spreadsheets with real-time data and integrates fragmented workbooks and data sources into one centralized location. This allows users to work in the comfort of Microsoft Excel with the support of a much more sophisticated data management system at their disposal. 

Every finance department knows how tedious building a budget and forecast can be. Integrating cash flow forecasts with real-time data and up-to-date budgets is a powerful tool that makes forecasting cash easier, more efficient, and shifts the focus to cash analytics. 

Regardless of the budgeting approach your organization adopts, it requires big data to ensure accuracy, timely execution, and of course, monitoring.

DataRails is an enhanced data management tool that can help your team create and monitor cash flow against budgets faster and more accurately than ever before.

Learn more about the benefits of DataRails here.