Investment banks provide financial services to corporations, companies, and governments based on their expert knowledge of finance-related concepts. These services can include raising capital, facilitating mergers and acquisitions, and managing money markets. People who work at investment banks have to not only have a deep understanding of finance and accounting but should also be able to crunch large amounts of data in order to derive conclusions from improving financial portfolios.
One of the main tools used to crunch this data is Microsoft Excel. In order to have a career in investment banking, you will have to crunch huge amounts of data sets and work on large financial models. For such a scenario, Excel proves itself to be an invaluable financial data analysis tool.
Since the scope and range of the work are very large and varied, it is imperative to have an advanced understanding of how Excel works. This will allow you to use Excel effectively and efficiently while allowing you to manage the data. Knowing the right shortcuts will reduce the amount of time you will spend crunching numbers and having a good knowledge of Excel will also teach you how to sift through the large data sets to glean the right information and patterns.
Excel is used to generate financial modeling which is a key element of investment banking. In fact, any investment banker will attest to the emphasis laid on Excel during their investment banking training. With Excel, you will be able to use your knowledge in finance, business metrics, and accounting to make forecasts of a company in the future. This allows the company to see their progress through hard numbers and will enable them to make decisions that are good for their company.
Financial modeling can be of many types, focusing on certain scenarios. Company A might be looking to increase their footprint in a new market. As an investment banker, you can propose to the company that acquiring Company B that has already made inroads into the said market will greatly benefit them. However, this claim will have to be backed by hard numbers. This is where Excel plays a role. Using the software, you can crunch large numbers of data related to Company B’s numbers, the cost of acquisition for Company A, and how and when the investment will pay off in the future.
Another scenario is when Company A is looking to raise capital but does not want to approach banks for a loan due to the high-interest rates. An investment bank can crunch numbers using Excel to suggest releasing an IPO.
There are many online advanced Excel courses available that are geared towards improving your skills in finance. Most of these courses are free and will help you gain an insight into the world of banking while also giving you important, time-saving tools that will prove essential in your finance career.
Do make sure that you look around the various courses and select one that fills in the gaps of knowledge you might have regarding Excel. You can learn how to use Excel at any stage in your education or career. An investment banking course might not focus on developing an understanding of Excel, and you might have to learn it elsewhere.