Is the CFA Useful for Corporate Finance?

The Chartered Financial Analyst (CFA) designation is an internationally recognized professional degree that may be earned by completing three exams administered by the CFA Institute. Anyone who is interested in pursuing a career in corporate finance should at the very least investigate the possibility of obtaining this highly desired position in the financial and investment sectors. It may be more beneficial to get a master’s degree in business administration (MBA) or even a Chartered Alternative Investment Analyst (CAIA) accreditation rather than the Chartered Financial Analyst designation in some situations. The CFA may be a worthwhile attempt in certain situations. 12

The Chartered Financial Analyst (CFA) title is not easy to get, and it takes a substantial amount of time, effort, and money to earn the credential. More than four years and significantly less than $5,000 are required to pass the tests. 34 However, you should be aware that your employer may provide assistance or financial compensation after you have successfully passed the tests.

Corporate Finance in the CFA Exams

There are three distinct levels within the CFA, and they are often referred to by their letter designations: L1, L2, and L3. As of the year 2022, courses related to corporate finance made up between 8% and 12% of the first exam. 5 The second examination is different each year, however topics related to corporate finance typically contribute for between 5 and 10 percent of the total score. 6 When it comes to matters of corporate finance, the third level is often disregarded. 6

Portfolio Management, Equity Research, and Hedge Funds

The Chartered Financial Analyst (CFA) credential is a very valuable general certification. Nevertheless, certain parts of the curriculum are more relevant to careers in corporate finance than others are. The term “corporate finance” is intentionally vague; nonetheless, the Chartered Financial Analyst (CFA) tests include fundamental aspects of the subject, including as working capital management, budgeting, leverage, foreign currency, and all research associated with these topics. 78

The CFA Institute will continue to collect self-reported information from its charter holders until the year 2021. At that time, there were around 167,000 people who had charters. 9 Portfolio managers held the position that was the most common among CFA experts all over the globe, accounting for 25% of the total. Research analyst occupied the second-highest reported job function, with 12% of all positions, followed by consulting, which occupied the third-highest reported position, with 10%. 10

A CFA certificate may strengthen a professional’s credentials while trying to enter into the buy-side of investing. This is because hedge fund analysts sometimes do the same duties as equities researchers for major fund managers. This could or might not be considered corporate finance, depending on the location of the job. For instance, in the United States of America, the terms financial planning, accounting, and analysis are often substituted for the more specific term corporate finance. Corporate finance in the United Kingdom, on the other hand, include investment banking as well as hedge fund activities. 11

Is Your Employer a Charter Holder?

The company for which you have aspirations may have an impact on whether or not you decide to pursue a CFA. Let’s say you’re interested in working for a multibillion-dollar company or a global corporation that has a sizable treasurer’s office. If the treasurer of the firm has a CFA charter, which is increasingly common in bigger companies, then the CFA may be helpful to the company. The training that is involved in preparing for the CFA exam should help with advanced functions that larger firms require, such as international equity research or foreign exchange transactions. If you have this designation on your resume, it should help you stand out from other candidates for career advancement who do not have this designation.

The curriculum of the CFA program is both comprehensive and superficial. A more specific degree or certificate might be advantageous for a wide variety of specialist industries, including corporate accounting and capital finance, for example. In many corporate finance jobs, having a master’s degree in finance may be preferred over having just a bachelor’s degree.

If You Are Just Starting Out

A significant number of the Fortune 500’s banking and investment companies use the MBA as a screening tool for potential employees. The CFA certification may be earned in a shorter amount of time but costs much more money. 3 In addition, the total number and variety of positions that are accessible to young professionals who have an MBA is far higher than the number and variety of jobs that are available to persons who have a CFA.

What Roles in Corporate Finance Are Applicable to the CFA?

A candidate for a range of careers in corporate finance, such as research analysts, stocks analysts, portfolio managers, chief financial officers, and corporate financial analysts, may find that earning a CFA credential is helpful in preparing them for their chosen field.

What Corporate Finance Topics Does the CFA Cover?

The Chartered Financial Analyst (CFA) program covers a wide range of topics, some of which include budgeting, leverage, portfolio management, working capital management, and foreign currency management.

What Are the Main Activities of Corporate Finance?

Corporate finance, in general, places an emphasis on business operations that help maximize shareholder value both in the near term and over the long term. Operations pertaining to corporate finance consist of things like capital investment, taxation, and the management of capital investment decisions.

What Portion of the CFA Exam Is On Corporate Finance?

On the CFA tests for Levels I and II, topics pertaining to corporate finance make up between 8% and 12% of the total questions. The Level III exam features no corporate finance questions.

The Level II exam in corporate finance will feature questions on a variety of issues related to corporate finance, including capital budgeting, corporate governance, capital structure, and mergers and acquisitions.

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