7 Finance Careers That Make Financial Modeling Skills Essential

Financial modeling is one of the most important skills for landing high-impact finance roles.

Professionals in investment banking, equity research, corporate development, FP&A, and more all rely on it to assess deals, evaluate performance, and support decision making.

Learn how financial modeling is a critical skill in these seven finance career paths and what that means for your own professional journey.

1. Investment Banking Analyst

In investment banks, M&A advisors help companies buy, sell, and merge with other businesses. Financial modeling provides the analytical foundation for these multi-billion-dollar transactions. 

Using specialized merger models, analysts project combined revenues, identify cost synergies, and determine how the deal will affect a buyer’s earnings per share. Discounted cash flow (DCF) models establish the company’s intrinsic value based on projected cash flows. 

Analysts also model different deal structures and financing options. They might compare an all-cash offer versus stock consideration or analyze how much debt the combined company can support. 

2. Private Equity Analyst

In private equity, analysts use financial modeling to evaluate potential business investments and maximize returns for their funds. Analysts build leveraged buyout (LBO) models, which serve as the primary analytical tool for calculating expected returns. The model tracks how the company’s cash flows will service and repay debt during the holding period.

Beyond LBOs, private equity firms build DCF models to assess intrinsic value and merger models to evaluate add-on acquisitions for portfolio companies. These financial models help identify value creation opportunities through operational improvements, strategic acquisitions, or financial engineering.

3. Equity Research Analyst

Equity research analysts work primarily at investment banks and independent research firms, covering specific sectors and analyzing 10-20 stocks within their coverage universe. They produce research reports that help institutional investors make buy, sell, or hold decisions.

Financial modeling drives every analyst’s recommendation, starting with three-statement models to forecast revenues, expenses, and earnings multiple years ahead. Analysts also use DCF models to calculate price targets and comparable company analyses using financial ratios like price-to-earnings (P/E).

Models require constant updates as companies report earnings or face new market conditions. Strong modeling skills allow analysts to quickly adjust assumptions and defend their investment thesis when challenged by portfolio managers.

4. Hedge Funds

Hedge funds manage investment portfolios for institutional investors and wealthy individuals, seeking positive returns in both rising and falling markets. Fundamental long/short equity funds, one of the most common types, rely heavily on financial modeling.

To identify opportunities, analysts build forecasts projecting future performance and DCF models to determine intrinsic value. They also use comparable company analysis to assess whether stocks trade at attractive multiples versus peers.

This type of financial modeling resembles equity research but focuses on finding mispriced securities rather than publishing recommendations. Many hedge funds recruit from investment banking and equity research because these professionals already have the modeling skills to evaluate investments quickly and accurately.

5. Corporate Development

Corporate development professionals drive growth for their organizations through mergers, acquisitions, joint ventures, and strategic partnerships. They identify acquisition targets that align with company strategy, whether expanding into new markets, acquiring technology, or achieving cost synergies.

Financial modeling determines whether these deals make financial sense. Teams build merger models to analyze how targets would impact the parent company’s earnings and cash flows. They create DCF analyses to establish valuation estimates and synergy models to quantify potential cost savings and revenue opportunities to justify deal premiums.

Unlike investment bankers who advise clients, corporate development professionals model deals from the buyer’s perspective, balancing strategic objectives with financial returns.

6. Financial Planning and Analysis (FP&A) Professional

FP&A professionals serve as strategic partners to senior management, providing financial insights that guide business decisions. They own the budgeting process, build forecasts, and analyze performance against targets to identify risks and opportunities.

Financial modeling anchors many aspects of FP&A work. Professionals build three-statement models that connect income statements, balance sheets, and cash flows to create comprehensive forecasts. They develop driver-based models linking operational metrics like headcount, sales volume, or production capacity to financial outcomes. These models help identify areas for improvement and determine available resources for new initiatives.

Strong modeling skills allow FP&A professionals to provide accurate forecasts and data-driven recommendations that shape company strategy.

Looking to level up your financial modeling skills in FP&A settings? Explore CFI’s Financial Planning & Analysis Professional (FPAP™) Certification, an expert-led program equipping you to excel as an FP&A professional.

7. Commercial Banking Credit Analyst

Commercial banking credit analysts evaluate companies’ ability to repay loans by analyzing historical performance and projecting future cash flows. They underwrite credit facilities ranging from working capital lines to term loans for acquisitions or capital expenditures.

Financial modeling determines whether borrowers can service their debt obligations. Analysts build cash flow models to project available cash for interest payments and principal repayment. They create covenant-compliance models testing whether companies will maintain required leverage ratios and debt service coverage. Credit model stress tests examine how borrowers might perform under adverse conditions.

These models directly influence loan structuring decisions, including pricing, terms, and covenant packages that protect the bank while meeting borrower needs.

Next Steps: Build Financial Modeling Skills and Advance Your Career

Financial modeling gives you the tools to analyze real-world business problems and present clear recommendations. It helps you support high-stakes decisions, from pricing acquisitions to forecasting revenue or testing strategic assumptions. 

These skills take time to master, which is why building them now gives you a clear head start in competitive finance roles. 

Start developing your financial modeling skills with CFI’s expert-led courses and build a career that puts analysis into action!

Explore CFI’s financial modeling courses and start building your foundation today.

Additional Resources

Financial Modeling: Essential Skills, Software, and Uses

Why AI Makes Financial Modeling Skills More Valuable Than Ever

How to Learn Financial Modeling and Advance Your Finance Career

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See all Financial Modeling resources