subject: Becoming a Successful Finance Manager [print this page] Becoming a Successful Finance Manager Becoming a Successful Finance Manager
But in the last 2 years more options have emerged for graduates which can lead them to successful career in Finance. IMS Proschool has researched and come up information on Finance Careers and how to prepare for these careers. Please note that this is not a complete guide, and also do keep in mind that Finance career is not for every one. It is important that you judge yourself thoroughly and make sure that Finance is what you want to do.
Every Organization needs Finance professionals to manage their business
There are more than 800,000 registered companies in India and every one needs a Finance Manager however big or small. If you want to target for these jobs, then you should be focusing on Corporate Finance and Finance Management Subjects.
Another common role in Companies is Treasury. This is the staff that manages the corporation's investments into shares, fixed income, property, and other assets.
Management Consulting Firms for those from Top 10 MBA Colleges
Most Consulting Firms hire MBA's from Top 10 Institutes. Consulting can either be "management consulting" or functional consulting. Finance is one of those functions where consultants can focus. Consulting firms tend to be organized by practices aligned along functions, which determines the office in which a consultant is based. Virtual (and sometimes actual) practices are often aligned along industry expertise. These two dimensions (function and industry) form matrix organizations. Consultants tend to work at specific intersections, known sometimes as "nodes." Whether your goal is management consulting or financial consulting, you need to first identify the practice in which you want to be based.
Banks and Insurance Companies
Commercial Banks
Banks present opportunities often overlooked by those wanting careers into finance, and thus are great prospects. Banks often have management rotation programs, as well as direct hire positions into commercial credit, or in wholesale banking, which means taking care of all the financing needs of a large client, including investment needs, debt financing, and merger financing. Some banks also hire candidates for risk assessment roles.
Insurance Companies
Insurance companies also have management rotation programs leading up to senior management positions. Insurance career may look tough in the early stages, but those who learn to survive in this tough business have lot of opportunity to have fast track career.
Investments
Big Investment Firms
International Firms like J P Morgan, Goldman Sacchs, Nomura Securities, Citi, Deutsche etc are what many people think of when they say investment banking. But there are other firms like SBI Caps, IDBI Caps, 40+ Fund houses in India. A commonly desired entry point is as an equity or fixed income (debt) analyst or associate looking for investment opportunities in their industry of expertise. Associates pitch their stock picks to the Portfolio Manager, who decides what stocks are in and which are out. When the decision to invest or sell is made, the trade is ordered from the trading desk. On the "distribution" side one can work with possible institutional investors who may want to buy into the various portfolios available.
Mid-Cap and Boutique Firms
These smaller firms run more limited investment portfolios, but the roles are very similar to those in Big Investment firms. Being smaller, they may be easier to gain entry into if you can develop contacts in them.
Corporate Finance
Although the name can be confusing, banks use Corporate Finance to refer to the structuring of deals centered around Mergers and Acquisitions. If a company were to acquire another, the mixture of debt and equity financing can yield major returns for the company.
Private Equity
Private equity firms arrange for investment in companies that are not publicly traded on any stock exchange.
Venture Capital
Small firms looking for cash to grow their business find financing with venture capital firms, which are a form of private equity. These firms collect private capital from interested investors, then look for prospective businesses to grow. Venture Capitalists not only identify prospects within their area of industry expertise, but also are actively involved in the management of those companies as they grow.
Rating Companies
Rating companies like CRISIL, Care Ratings, ICRA, Brickworks Ratings, Fitch have grown considerably in the last 5 years and are increasing their employee counts. These presents a new opportunity for those who want to make career in finance.
Required Skills
Finance careers require the same soft skills as any other career. However, quantitative skills need to be superior. Finance professionals in many roles need to analyze both quantitative (typically financial) and qualitative data, then build models upon which to base decisions. Here are specifics about desired skills.
Critical, detail-oriented thinking, with strong quantitative skills.
An understanding of managerial accounting, and operations background can help in project analysis. MIS coursework may help with both internal systems and general analysis tools.
Knowledge of financial markets, capital structure and other fiscal policies and risk management.
An understanding of financial statements, an ability to analyze those statements and an ability to translate financial and other information into opinions about credit quality and relative pricing of equity securities.
Candidates should be able to forecast scenarios, analyze them and recommend a course of action.
The ability to create and use financial models is essential.
All employers seek leadership skills and the ability to work in teams.
Strong oral and written communication skills.
Personal computer proficiency and information technology skill.
Sample Questions for Interview
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What do you know about WACC? Where do the cost of capital and cost of debt values in the WACC equation come from?
What is better for our company, 2/10 or net 30?
If you are analyzing the credit of a potential customer, what factors would you consider?
What is good/bad about debt/equity?
Walk me through the steps of conducting an NPV analysis.
Is ROA a good measure of success?
What are the methods of raising capital for a project?
What could be some reasons why our actual cash flow was less than forecast?
Does it ever make sense to accept a negative NPV project?
What are some things you can do to further investigate a negative NPV project?
How do you calculate WACC?
What is an accrual?
How would you go about pricing a product?
How would you go about analyzing a situation where demand exceeded capacity?
Which is better for your company, offering a 2% discount if paid in the first ten days, or getting the net due in 30 days?
If you have two products that are similar, how would you decide which one you want to launch (or both?)?
How does the increase in interest rates affect our company?
How would you make a business profitable (discuss P&L for this one!)?
Revenues are rising and profits are falling. What could be going on?
You have the option to fund a project that will cost an amount approximate to 80% of equity. Do you undertake the project?
What is the difference between Internal Rate of Return and Weighted Average Cost of Capital?
Must Read books for those who want to make a career in Finance
The Intelligent Investor Benjamin Graham
Alchemy of Finance George Soros
Investment Analysis and Portfolio Management Prasanna Chandra
Reminiscences of a Stock Operator - Edwin Lefvre
Advanced Corporate Finance - Joseph Ogden
Markets, Mobs, and Mayhem - Robert Menschel
Extraordinarily Popular Delusions and the Madness of Crowds Charles Mackay
The Money Game Adam Smith
Money Ball - Michael Lewis
The Innovator's Dilemma - Clayton M. Christensen
Gorilla Game - Geoffrey A. Moore
Risk Budgeting - Neil D. Pearson OR Capital Market Risk Advisors (not sure which)
Liar's Poker: Rising Through the Wreckage on Wall Street Michael Lewis
Article written by Kaushik Ramachandran Director, IMS Proschool
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