Finance and Accounting
Financial statement analysis and modelling
A company's annual report is a puzzle with most pieces supplied: the income statement, balance sheet and cash-flow statement, plus notes that explain what the headline figures hide. Financial analysis reads those pieces critically, and modelling rebuilds them in a spreadsheet so the future can be tested one assumption at a time. Analysts in banks, funds and corporate teams spend a large share of their week doing exactly this.
Why this topic exists: Reading the three statements and rebuilding them in a spreadsheet: the CFA topic Financial Statement Analysis and the core of CFI's FMVA, whose curriculum weights modelling at 35 % and accounting at 20 %.
Financial analysis starts where accounting stops. The accountant produces the statements; the analyst asks what they reveal. Are margins widening or thinning? Is profit turning into cash, or piling up as unpaid receivables? Is debt growing faster than the business that must repay it? Ratios are the shorthand for these questions, but the useful evidence is usually in the notes, where revenue recognition choices, leases, one-off items and dealings with related parties are disclosed.
Modelling is the constructive half. A three-statement model links the income statement, balance sheet and cash-flow statement so that changing one driver, such as sales growth or customer payment terms, flows correctly through all three and the balance sheet still balances. Forecasts, scenarios, debt schedules and often a valuation sit on that base. The CFA Program gives financial statement analysis one of its ten topic areas, and CFI's FMVA builds an entire certificate around the modelling craft.
What a sound model contains
- Separated inputs. Every assumption lives in one labelled place, so a reviewer can find it and argue with it.
- Historical statements rebuilt from the filings, which also tests whether you have really read them.
- Driver-based forecasts for revenue, costs, working capital and capital spending, each tied to an operational reason.
- Supporting schedules for debt, depreciation and tax that feed the main statements instead of being typed into them.
- Checks that flag when assets stop equalling liabilities plus equity, or when cash fails to reconcile.
- Sensitivity and scenario tables showing which assumptions actually move the answer.
The commonest failure is rarely a broken formula. It is an assumption nobody questioned: a forecast of ten years of growth far above the industry's looks precise and is fiction. Test each driver against the company's own history and against close peers, and keep a short note beside every input saying where it came from and who agreed it.
Spreadsheet first, code later
Excel is still the language analysts, reviewers and managers share, so a model other people must check is easiest to hand over in it. Python earns its place when data is large or a process repeats, and Power BI when results need a live dashboard. The general spreadsheet craft is covered under spreadsheets.
How the FMVA weighs the work
CFI publishes the balance of its FMVA curriculum, and it is a fair sketch of the job: modelling takes 35 %, accounting 20 %, valuation 15 %, FP&A 10 %, Excel 8 %, data visualisation 7 % and qualitative skills 5 %. The programme lists 45 courses, 18 of them required, estimated at 100 to 120 hours, and the final exam's pass mark is 70 %. It is a skills certificate from a training provider rather than a regulated title. The CFA charter remains the credential for investment analysis, and its exams test analysis through multiple-choice items, vignettes and written answers rather than a live model. Valuation itself continues in corporate finance and valuation.
Next to this topic
- Accounting and bookkeepingDouble-entry, ledgers, the three statements and the reporting frameworks (IFRS, US GAAP): the base of ACCA Financial Accounting, AAT Levels 2 to 4 and CPA FAR; bookkeeping software (QuickBooks, Xero) is where most people meet it.
- Management accounting, budgeting and FP&ABudgets, forecasts, costing and variance analysis: what the CMA examines and ACCA Management Accounting and Performance Management teach; financial planning and analysis is the same work inside a corporate finance team.
- Corporate finance and valuationTime value of money, cost of capital, capital structure, DCF and comparables: the CFA topics Corporate Finance and Equities, ACCA Financial Management and Advanced Financial Management, FMVA's valuation modules; where the field's fundamentals courses start.
- Personal finance and financial planningBudgeting, saving, credit, insurance, pensions and estates for a household: the CFP Board's eight Principal Knowledge Domains give the professional map; CISI's Level 2 Fundamentals the entry point for people who will work in the sector.
- Investing and portfolio managementAsset classes, risk and return, diversification and portfolio construction: the CFA topics Equities, Fixed Income, Alternative Investments and Portfolio Construction; CFP's Investment Planning domain.
- Crypto-assets and blockchainDistributed ledgers, keys and wallets, smart contracts, tokens and DeFi: the technical side rests on the Bitcoin and Ethereum documentation, the consumer side on the FCA's warning that a crypto investor should be prepared to lose everything.
- Financial risk, regulation and complianceMarket, credit, operational and liquidity risk, Basel, AML and KYC and conduct rules: FRM Parts I and II, the CFA's Ethical and Professional Standards, CFP's Professional Conduct and Regulation; where finance meets the law.
- Banking, fintech and paymentsDeposits, lending and credit analysis, payment systems, cards and open banking: the UK Payment Systems Regulator's eight designated systems name the rails, CFI's CBCA the credit analyst's job; the field's newest titles live here.
- TaxIncome, corporate, VAT and sales tax, capital gains and returns: CPA REG and the TCP discipline, ACCA Taxation and Advanced Taxation, CFP's Tax Planning domain; the one finance topic every adult meets.
- EconomicsSupply and demand, national accounts, inflation, interest rates, monetary and fiscal policy: the CFA topic Economics; the macro context every other finance topic assumes.
Concepts to know
Glossary entries with the reason each one matters here.
- Financial statements
The published set that three-statement models rebuild.
- Cash flow
IAS 7's three groups, and the gap between profit and cash.
- Working capital
Receivables, inventory and payables, forecast in days.
- EBITDA
The non-GAAP headline that analysts reconcile back to cash.
Certifications that test it
Vendor exams and free certificates; facts, cost and the preparation path are on each page, and the certifications hub has them all.
Tools of the trade
- Microsoft Excel
The modelling surface of the whole field.
Frequently asked
- Do I need the FMVA to get an analyst job?
- No. It structures the learning and signals intent, but a model you built yourself from a real company's filings, with clean inputs and working checks, is stronger evidence in an interview. Many analysts hold no modelling certificate at all.
- How does financial analysis differ from FP&A?
- Financial analysis usually looks outward, at companies an investor or lender is judging from their published statements. FP&A looks inward, at the analyst's own employer, using internal budgets and forecasts. The spreadsheet skills overlap; the data and the audience differ. See management accounting and FP&A.
- Which ratios matter most?
- The ones that answer the question at hand. Margins and returns on capital describe profitability, current and quick ratios describe short-term liquidity, and leverage and interest cover describe solvency. A ratio means little alone: compare it over several years and against close peers.
Courses in the directory
137 courses are filed here; the top 6 by our ranking, details and the provider link on each course page.
Last reviewed 26 September 2026 · Getting Digital