How will an undergrad accounting degree contribute to a career in finance?
I am an accounting major applying to masters in finance programs. I would like to get into financial analysis. Can you help me make a case that a solid understanding of accounting will be a great help to me as I enter finance? Thanks
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Answer by Buck This
Ummm... I should hope you could grasp this one by now if you're getting your undergraduate degree in accounting and are moving into finance :P. I majored in both and am finishing my master's of accountancy, and the two fields are EXTREMELY connected. Accounting lets you know the facts behind the numbers and how companies came up with them. In other words, a financial analyst who understands little about depreciation might not understand that two companies, who seem the same when using profitability ratios, might use different methods of depreciation. This can help you weed out some of the accounting gimmicks in financial statements (that us auditors also try to find!) and find the true profitability of the company's operations. If one company is making the same profit as another but using an accelerated depreciation, it's operation could be more profitable than they look.
It also gives you a better understanding of inventory valuation methods (though this will not be as big a factor with the coming of IFRS), intangible impairments, and how to read the notes to the financial statements to pick out important topics not shown in the financials.
Hope that helped a bit :). There are many other reasons why a background in accounting is great for a future in finance, but those are just a few off the top of my head. Good luck on your applications!
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