Table of Contents
The financial health, flow, and fluidity of your business will ultimately dictate its long-term success, which is why monitoring your money matters carefully, comprehensively, and accurately is absolutely essential.
In our data-driven digital age, 'business intelligent' organizations with the ability to collate, organize, and leverage the insights that are most valuable to their ongoing commercial goals are the ones that are destined to thrive in the long term. Online data visualization takes precedence in business operations, creating more efficient and faster workspaces.
That said, in a time wherein less than two years, around 1.7 megabytes of new information will be generated per second for every single person on the planet, businesses looking to keep their financial affairs fluid need access to KPI dashboards equipped with graphs and charts that are digestible, accurate, and deliver the level of insight required to increase efficiency and stop potential pitfalls before they occur.
In this article, we will present the basic definition of financial graphs, explain why you need them, and answer the most basic of questions: what graphs to include in financial analysis? By presenting data graphically, you will not only make the most out of your monetary information, but simple visuals will do half of the explaining for you. That said, let's get started.
What Are Financial Graphs?
**click to enlarge**
Financial graphs and charts are visual tools that allow companies to monitor various performance metrics in areas such as liquidity, budgets, expenses, cash flow, and others. By doing so, they can successfully manage risks to ensure healthy finances and steady growth.
To ensure the best possible performance for a company, conducting regular financial analytics and ensuring the highest quality of data management must be the top priorities of companies, no matter the size. If the finance department raises an alarm, everyone must carefully listen because it concerns the most crucial information and can lead to serious damages if ignored. That's why financial charts must be created with the utmost care and attention. Let's see this in more detail.
Why Do You Need Financial Analysis Graphs?
As humans, we respond to and process visual data better than anything else. That said, when it comes to digesting and taking action upon vital financial metrics and insights, well-designed finance graphs and charts offer the best solution. According to Illinois State University, when it comes to visual aids of this kind, three standards apply: graphs and charts should display unambiguous information, meaningful data, and presently said insights in the most efficient way possible.
Fundamentally, you need them because:
- You will be able to track your liquidity, cash flow, budgets, and expenses accurately with ease, visually, and automate processes that were oftentimes done manually and with higher risks of errors.
- By setting the right financial KPIs for your organization, you can set valuable goals that result in growth and success. While there are numerous charts out there, we will explain the invaluable ones for any company.
- You will be able to make sense of all the financial information and metrics as they will be split into actionable categories and presented intuitively and scannable, no matter the metric you need to include and analyze.
- Pen and paper or static data will no longer cut it in today’s fast-paced, competitive commercial landscape. As mentioned, manual work is prone to mistakes you can easily avoid by using self-service analytics software.
“Every second of every day, our senses bring in way too much data than we can possibly process in our brains.” – Peter Diamandis, Chairman/CEO, X-Prize Foundation.
Based on this quote alone, it’s clear that by leveraging the power of robust charts that deliver accurate, reliable, and clear-cut financial insights, busy fiscal departments will be able to make sense of the insights before them, resulting in success and evolution, rather than getting bogged down with droves of meaningless and convoluted data.
You can start by creating a simple income vs. expenses graph, add additional charts relevant to your organization's story and finally create a dashboard that will present all your information on a single screen. Let's see this in more detail.
Which Role Does Financial Data Visualization Play?
**click to enlarge**
Financial data visualizations such as interactive dashboards are complete with charts and graphs that assist in the tracking of all of your core KPIs on one navigable platform. For optimizing reports and detailed analysis, you can check our blog article about financial report examples.
These dashboards give time-stretched finance departments the power to remain on top of the economic performance of the business, resulting in more efficient cash management, accurate expense tracking, comprehensive insights on sales, and additional visual insights geared toward reaching valuable financial goals.
A financial dashboard offers all of the metrics and insights needed to ensure the success of your overall performance, cash flow, cash management, and profit and loss, among others. The business dashboard above not only makes extracting key data swift but is developed in a way that makes communicating your findings to important stakeholders within the business far more simple. And in contrast to a traditional Excel chart, these ones serve real-time data that will prove invaluable to the financial future of your company.
Not only will your company have the opportunity to explore, monitor, and access real-time data, but the interactivity levels are an invaluable resource for managing enormous amounts of information, especially in the financial sector where a small mistake can lead to millions of damages. That's why interaction with the finance charts and graphs is of utmost importance: a single KPI can be viewed in numerous useful ways and angles that static presentations could never offer.
Finally, we cannot avoid mentioning collaboration as one of the top roles of modern financial data visualization tools. As we said before, finances are arguably the most important aspect of any business. If something is wrong with them, most likely, the entire company will suffer. By using BI dashboard tools such as datapine, you will be able to share your financial insights live with the rest of the departments in your company and enhance a collaborative, data-driven work methodology that will optimize your business performance as a whole.
Graph use in financial reports is already a business standard in today's environment. When you add up intelligent tools, automation, stunning visuals, and interactivity for your data visualization process, your finance department will significantly increase productivity and decrease costs. Let's see this through our top 30 financial chart templates.
See Our 30 Financial Business Graph Examples
To put the importance of a dashboard-based financial business graph into perspective, here are 30 templates that cover the most critical money-centric aspects of the ambitious modern business.
1. Gross Profit Margin
As a key component of our profit & loss dashboard, this indicator has been developed in the form of a traditional pie-style chart but with a more navigable design. The gross profit chart showcases your overall revenue minus the cost of goods sold, divided by your total sales revenue.
Offering a visual representation of your gross profit as well as clearly defined metrics, this chart will allow you to measure your organization’s production efficiency and ultimately enable you to enjoy a greater level of income from each dollar of your sales.
2. Operating Profit Margin
As another profit and loss-centric financial charting example, this visual is split into an easy-to-digest percentage gauge in addition to a detailed bar chart and will enable you to accurately calculate your Earnings Before Interest and Tax (EBIT).
The higher your operating income, the more profitable your business will potentially be, and this chart will help this metric from dipping through a mix of historical data and priceless real-time insights.
3. Operating Expense Ratio
The operating expense ratio (OER) is also strongly related to the profit and loss area of your finance department's key activities, and this color-coded health gauge will allow you to access the information you need, even at a quick glance.
The OER will give you the power to understand the operational efficiency of your business by comparing your operating expenses to your overall revenue. This is the best visual to show profit and loss, but you do need to connect it with other charts to create a proper financial data story. By monitoring this information regularly, you will be able to decide whether your venture is scalable and make necessary changes to your commercial strategy if you feel it isn't.
4. Current Ratio
Closely tied to the cash management dashboard, this financial graph example is essentially a liquidity ratio that will give you the ability to understand how equipped the business is to pay your most critical obligations in the short term, often within a 6 or 12-month period.
Presented in the form of two visual ratio calculations for swift access to your overall liquidity health or performance as well as a column chart to help you compare data and spot trends, this chart will ensure that you will be able to meet obligations, commit to payments, and quash detrimental roadblocks before they unfold.
5. Net Profit Margin
Presented in a similar format to the operational expenses graph, this particular profit graph makes it easy for busy teams to obtain and analyze the information they need to delve deeper into the health of your bottom line, as a result gaining the level of insight required to boost your overall net profits.
As one of the most vital financial KPIs a business can track, this graph is invaluable - and by using this robust, reliable, and intuitive chart, you will be able to iron out any inefficiencies and boost your company’s net profit over time.
6. Accounts Payable Turnover Ratio
Regarding the smooth and responsible handling of your company's cash management activities, the accounts payable turnover is another liquidity calculation that will ensure that you are able to pay all of your important expenses within the required deadlines or set timeframes.
The ratio itself changes according to real-time shifts and is displayed in a bold numbered format, while historical or chronological information is presented in the form of a column graph that showcases turnover percentages split into different periods of time. A higher ratio gives suppliers and creditors the assurance that your business pays its bills frequently and is a pivotal metric when negotiating a credit line with a supplier, so it's a chart your company cannot afford to live without.
7. Accounts Receivable Turnover Ratio
Presented as a scannable pie chart, accompanied by vital turnover metrics, this is one of the financial graphs templates that quantifies how swiftly your organization collects your payments owed, thus showcasing your effectiveness in extending credits.
The quicker your business can transform credit sales into cash, the better your liquidity, ultimately translating to a greater ability to handle your short-term liabilities.
8. Return On Assets (ROA)
This particular example is incredibly useful as it's a financial performance graph that will allow you to understand how well your business can leverage its assets to gain more profit.
Displayed in an easy-to-follow column chart and trend line format, this graph offers an exceptional visual representation of how profitable your organization is concerning your overall asset. The bottom line here is the higher your ROA, the better, particularly when you compare this metric to your direct industry competitors - so this chart is essential to your ongoing financial progress.
9. Return On Equity (ROE)
This color-keyed visual offers a distinct measurement of the level of profit you are able to generate for your various shareholders. This particular metric is calculated by dividing your business’s net income (minus the dividends to preferred stocks) by the equity of your shareholders (excluding preferred shares) - not only does this provide an excellent gauge of financial performance, but it’s also effective for comparison with other competitors within your sector.
The better your Return on Equity, the more value you are offering to your shareholders, which will translate to tangible long-term commercial success.
10. Gross Margin Return On Investement (GMROI)
A great retail KPI is the gross margin return on investment (GMROI). It is an inventory profitability indicator, and it measures the ability of an organization to turn its inventory into cash (after subtracting the inventory costs). The GMROI is calculated by dividing the gross profit by the average inventory costs. The result will tell you how much money you made from the inventory you invested in. An industry standard for this metric is a ratio higher than 1. However, experts recommend that a successful retail store should have a GMROI of around 3. This means the company is making money from its investment. On the contrary, a ratio below 1 means something needs to be done to improve profitability.
A good practice when it comes to measuring the GMROI is to do it by product category. This way, you can understand which products return more and focus your efforts on those.
11. IT Cost Break Down
This financial graph template focuses especially on the IT department, but you can easily adjust it for any other function in a company. We can see how the allocation of costs behaves in designated units (software, hardware, SP, and personnel) while depicting the cost percentage of each of their elements (for instance, administration, development, operations, and support). It's crucial to monitor the expenses graph to identify the main cost drivers on the one hand and possibilities on the other so that the company can adjust its strategies.
If you see that one unit spends significant amounts of resources, it would make sense to investigate further and check if the costs are justified or need more attention. By using relevant online business intelligence software, you can directly interact with all of the values presented in this visual and dig deeper as much as you need. Not only will you cut time into exporting, importing, scrolling, and searching for the right information, but your comprehension will be much quicker since humans are visual creatures, as stated earlier.
12. Cost Avoidance
Our list of financial data visualization examples wouldn't be complete without cost avoidance. This is one of the graphs that are important to take care of since it tracks how much costs, in this case, of a procurement department, have been saved in a specific time frame. You can also depict a 5-year trend like in our template above and organize it by supplier category. This metric is not as tangible as direct cost savings, for example, but it does bring value to the whole procurement department.
The goal of every procurement professional is to reduce costs in the future (as well as the present), and this chart can easily depict how much these efforts have brought in a company and had a direct impact on the savings processes. For instance, a procurement professional or manager can lock the price of a contract with a vendor to avoid a future price increase. To see more details on procurement operations and management, you can explore our set of procurement metrics.
13. Cash Conversion Cycle
The cash conversion cycle (CCC) is a metric that helps companies in tracking how much time a company needs to convert their resources into cash from sales. In our example, the formula is also simply depicted so that it can easily be followed: you need to add the day's sales outstanding to the days of inventory outstanding and deduct the days payable outstanding to calculate the cash conversion cycle. If you use a finance graph that you can interact with and calculates the data automatically based on your input, the possibility of making a human error is minimized. You don't have to calculate each time you need a report manually, but you can monitor your data in real time with just a few clicks.
In the end, the goal is always to decrease the cycle as much as possible since an increment can mean that the organization is not fully efficient in its management and operations. It's simple: if the company sells what consumers want to buy, the cycle is quick and healthy. If not, additional corrections need to be performed so that the company doesn't fall into even more serious difficulties.
14. Vendor Payment Error Rate
Paying invoices and issuing them to vendors, suppliers, or other stakeholders is essential to analyze since it can show how many errors are made and if the accounts payable department is healthy. Of course, mistakes do happen, but sometimes they can be dangerous, so they should be kept at a minimum. Errors may include payment to the wrong entity, overpayments, or double invoicing, and each accounts payable manager usually strives to reduce those errors as much as possible.
A proper financial and analytical report can assist in this process. When you automate and digitalize your analytics process with the help of modern software tools, you don't have to worry that your error rate will increase any time soon. In our example above, we can see that our average error rate is 1.3%, but it has started to decrease in the last few months. The goal should be to have the lowest rate possible and avoid any possible business disputes.
15. Operating Cash Flow
This cash flow graph gives a clear picture of the business operation's performance. The example presented above shows how much cash a company generated over the course of 5 years. It doesn't include investments and/or non-sales-related income, which basically means it focuses on main cash activities (for example, selling/buying inventory or paying salaries). This graph is important to track since it clearly depicts if a company can sustain its operations and eventually grow. It should be monitored closely and regularly to avoid any potential difficulties.
To create such a chart, there are some data visualization techniques that are useful to study and follow. That way, your analysis and presentation of vital information will yield the best possible value and ensure the most profitable results.
16. Fixed Operating Expenses
As its name suggests, the fixed operating expenses KPI tracks all expenses that need to be mandatorily paid in a specific time period and that will not vary depending on the volume of production or sales. These include salaries, rent and utilities, office supplies, marketing, and insurance, just to name a few. While these expenses are very hard to lower as they are not influenced by the production of the company, it is still fundamental to keep a close eye on them to make sure that they don’t go up too much as they account for a big percentage of revenue.
17. Variable Operating Expenses
On the other hand, variable operating expenses are all expenses that can vary depending on the production level of the company. We are talking about raw materials, distribution and costs, sales commissions, packaging, and many more, depending on the industry. They are easier to control and manipulate than fixed ones because they follow a simple rule: the more you produce, the higher the variable expenses. The more you sell from what you produced, the less impact from these costs. Companies also use their variable expenses to define pricing, plan their budgeting strategies, and track their profitability (together with fixed expenses), among other things.
18. Actual vs. Forecast Income
Forecasting is the process of using historical and current data to generate accurate predictions about the future. In finances, forecasting has become an increasingly important practice that enables managers to generate strategies based on realistic scenarios. Our next example is a table displaying the actual vs. forecast income with insights into the actual value, the forecast value, and the absolute difference between the two. Here, we can observe a difference of $-33,237 in the net profit. This can shine a light on some issues that need to be addressed to prevent the business from having profitability problems in the future. However, it is important to note that the difference between the forecasted and the actual value is not necessarily a negative thing. It will depend on the way the business approaches forecasting.
19. Actual vs. Forecast Expenses
Following with another forecasting example, we have the actual vs. forecast expenses. This time, displayed in a financial bar chart instead of a table. As we mentioned in previous examples, keeping expenses at a minimum while maintaining profitability is one of the biggest challenges for organizations of all sizes. Here, we can see the actual costs compared to the forecasted value and an absolute difference between the two. Overall, we can say that this business was successful at keeping costs low as their absolute value is on the lower side. That said, there is still room for improvement. For instance, we can see that marketing costs are almost $50.000 higher than the forecast. This is something that is worth exploring in more detail to find the causes and determine if it is a critical issue or not.
20. Working Capital
Moving on with our list of financial chart examples, we have the working capital. This is a straightforward graph that gives you a glance overview of the financial health of your company. It doesn't include any ratios or proportions but solely numbers that represent the state of your current liabilities, current assets, and total working capital. If the working capital is high, you might want to consider investing the excess cash, as higher values don't necessarily mean your company is performing well.
21. Income Before Tax
Our next financial chart template shows a summary of an income statement. We have mentioned the value of an income statement and discussed many of the KPIs present in it throughout this post. However, there is one missing that we will focus on right now: the income before tax, also known as EBIT. As its name suggests, the income before tax is a KPI that tracks the amount of income generated by a company before subtracting all tax-related expenses. It is used by managers and investors as a way to analyze the performance of a company’s core operations without considering tax costs, as they can cloud the actual operating values.
22. Berry Ratio
The Berry Ratio compares the gross profit of a company with its operating expenses to understand the amount of profit from a specific time period. In the chart above, we see that 1,0 is the reference coefficient to measure this metric. If your company’s Berry Ratio is below 1,0, it means that you are losing money. On the other hand, if it’s higher, it means that you are making a profit above all variable expenses.
This business graph is a fundamental part of a CFO dashboard, if you track it regularly, you can understand which exact period your profit dropped or increased and draw conclusions to improve your business finances.
23. Economic Value Added
This interactive gauge chart aims to track the Economic Added Value (EVA) of a company, the colors red, gray, and green make it easier to understand if the number is positive or negative visually. This metric is obtained by deducting the costs of capital from the operating profit and adjusting it for taxes on a cash basis. In order to calculate your company’s Economic Added Value, you can use a simple formula consisting of: net operating profit after taxes (NOPAT) - invested capital * weighted average cost of capital (WACC).
The EVA is a fundamental financial metric to understand if a company’s investment is returning any value. If a business has a negative EVA, it means that it’s not generating any profit from its investments. By measuring this metric on a regular basis, you’ll have a bigger picture of your company's wealth and make better managerial decisions in the long run.
24. Payroll Headcount Ratio
Next, in our financial data visualization examples, we have the Payroll Headcount Ratio. This metric consists of dividing all the HR full-time positions by the total number of employees based on various aspects such as their associated costs or revenues. You can include full-time and part-time employees as well as freelancers or contractors in the calculation. The overall aim of the Payroll Headcount Ratio is to understand how well your company is managing its workforce costs.
By tracking HR metrics like the Payroll Headcount Ratio, you can make sure that your labor costs are well invested and bringing positive financial gain to your company, as well as help you understand if your overhead costs for payroll are too high, this way you can take action quickly and avoid any difficulties.
25. Procurement Cost Reduction
Cost reduction is an important KPI that you will find in any procurement dashboard. This metric's aim is to track the tangible savings you have made in terms of cost management over the years. The image above displays two charts to understand cost reduction, the first one is a 5-year trend so you can compare your performance with other years, and the second one gives a detailed view of the savings by supplier category; this way, you can learn exactly on what area you saved money.
By currently monitoring your cost reduction, you can streamline your supplier lifecycle management, increase efficiency by leveraging supply chain analytics or train your staff on how to save costs. All of this will certainly increase your numbers in the long term.
26. Cost Per Hire
This straightforward metric aims to track the number of resources you invest in each new employee you need to hire. In the pie chart above, we can see the yearly expenses divided by seniority level: Junior, Mid-level, and Senior. The chart covers all expenses that come from the recruiting process, such as marketing, time cost that the recruiter spends reviewing CVs and conducting interviews, as well as training and cost materials associated with it.
Although it might not seem like it, the recruitment process usually costs businesses a lot of money. By keeping track of this metric, you can optimize investments and extract all the potential out of your talent acquisition budget. In the end, investing in new talents is what will bring more value back to your company.
27. P/E Ratio
Moving on with our list of financial graphics, we have the price-earning ratio (P/E). This indicator, displayed in an intuitive area chart, is used to measure the value of a company compared to its competitors. It does this by relating a company’s share price to its earnings per share. It gives potential investors an idea of how much money they would pay for stock shares for each dollar of earnings. The P/E calculations should always consider competitors from the same industry, as the values will considerably vary depending on the nature of each industry.
28. Quick Ratio/Acid Test
Ensuring liquidity is one of the greatest financial aims of any organization. The quick ratio, or acid test, aims at helping companies understand their liquidity’s health in a short-term period. It measures the ability of a business to turn its near-cash assets (assets that can be turned quickly into cash) to pay down its current liabilities. The higher your quick ratio, the better. Your goal should be to keep it at a minimum of 1,0. This means your business has the capacity to pay all of its current liabilities quickly.
An important note when it comes to monitoring this metric is to understand that, when comparing it to the current ratio, the acid test will always be smaller due to the fact that it only includes near-cash assets.
29. Budget Variance
Next, we have the budget variance displayed in a table chart. This straightforward metric expresses the difference between budgeted and actual figures in different accounting categories. The values can be favorable or unfavorable and are clearly depicted with the colors red for negative and green for positive. This way, you get a glance notion of what is working and what is not. Negative budget variances can indicate that the company was not able to forecast costs and revenues accurately. However, some negative variances can also happen due to external factors that are outside the control of the organization. This can be changing business conditions, changes in the overall economic environment, or an increase in the costs of raw materials, just to name a few.
30. MRR Growth
To start explaining the MRR growth, we first need to understand what MRR even stands for. The monthly recurring revenue is the income that a business can expect to generate every single month. It is a fundamental metric that serves as a foundation for calculating other relevant indicators, such as the customer lifetime value or the average selling price. Tracking the MRR growth for longer periods of time can tell you how sustainable is your business model and how fast you are growing.
This metric proves to be specifically useful for companies working with subscription-based models, as predicting recurring revenue is easier for them. Monitoring your MRR growth with a line chart is the most effective way to do it, as it can easily indicate how the values increased or decreased during the observed period.
Which Chart Type Is Best For Visualizing Your Financial Data?
We couldn't finish this article before mentioning a very important aspect to consider when analyzing or presenting your financial data: charts and graph types. Choosing the right business graph to display your information is just like taking a picture of something and showing it to others. You want it to be understandable and focused on what you need in order to support a discussion. Here we show you some of the most common charts types to visualize your financial insights:
- Line chart: This type of finance chart is ideal for displaying multiple series of closely related data over a period of time; like this, you can find trends, accelerations, decelerations, or volatility in your data. Its minimalistic design consisting of thin lines makes this type of chart very easy to understand. In order to maintain it like this, you should always keep your axes scales close to your highest data point. This way, you avoid wasting valuable space in the chart. It is also important to consider only displaying the relevant metrics for your analytical process since too many variables can overcrowd the chart and make it hard to decipher. You can use line charts to track financial KPIs such as the return on equity, working capital ratio, or earnings before Interest and Taxes.
- Number chart: A number chart is one of the most basic types of business graphs, as it is essentially a ticker that gives you an immediate notion of how a specific KPI is performing. You just need to choose the period you want to track and if you want to compare it to a trend or a fixed goal, depending on the aim of your analysis. In finances, you can use it to measure metrics like the total cash balance, your current assets and liabilities, or some sales KPIs like the total revenue. Keeping track of these live numbers will help you catch any anomalies in time.
- Tables: Tables are a classic way of displaying information, and they can prove to be really useful for working with your raw data. You can use a table to display many precise measures and dimensions, always having the grand total to compare or support it. They can also be useful if several people need to access the data for different reasons, as they can filter it and work only with what they need. It is important to consider that due to its complexity, you should always try to make your tables as visually appealing as possible regarding colors and shapes. You can accomplish this with the help of a dashboard tool. In finances, you can use tables to display your profit and loss statements (P&L) to drive advanced insights into your company's revenues.
- Gauge chart: The gauge chart is a straightforward and simple type of visualization often used to display the performance of a single metric with a quantitative context. With the help of colors and needles, this type of chart aims to track the progress of a KPI in comparison to a set target or to other time periods. It is important to consider that because gauge charts are most effective for displaying one single metric, it is not the best chart to use if you want to drive actionable insights from your analysis. You can go back to our list of financial graph templates to see the economic value-added and the net profit margin illustrated with colorful gauge charts.
- Progress chart: As its name suggests, a progress chart aims to track how much percentage of a specific goal you have accomplished and how much you have left to complete it fully. The data can be expressed in circles or bar charts, and you can also add reference numbers to indicate where you should be in a specific time period and compare if you are late or advanced to accomplish your final goal. If you want a more detailed view, you can also break down your progress in different areas and track each of them separately to understand if any step-backs are happening and where. In finances, you can use it to keep track of your budget spending or the development of a big project where your company placed a big investment.
- Waterfall chart: This type of visualization helps understand the cumulative effect between positive or negative values to reach a final value. For instance, if a company wants to illustrate its yearly profit, the waterfall would display all sources of revenue and then add or deduct all costs to reach the total profit of the year. The additions and subtractions can be both time-based and category-based. In the use case we just mentioned, they are divided by category of revenue and costs. Our example on return on assets at the top uses a monthly division.
- Area chart: This type of graphic typically combines a line and bar chart to show how one or more numeric values change based on a second variable. The area chart differs from these two others by adding shading between the lines and the baseline. It is typically used to show trends between associated attributes over time. In finances, area charts are usually used to represent stock changes over time, as seen in our P/E ratio example above.
- Bar chart: This type uses horizontal bars in a rectangular shape to display categorical data. They are mostly used to compare values based on a specific category, with the categories represented on the y-axis and the values on the x-axis (horizontal). They are used in finances when summarizing large data sets, as the horizontal orientation allows you to fit multiple values and categories without overcrowding the chart. For instance, when you want to visualize revenue by top 15 products.
- Column chart: In many places, column and bar charts are considered the same. However, they do serve different purposes depending on the goal and the analytical context. Column charts display categorical data in rectangular columns that have a vertical orientation. This means they can fit fewer values before they get overcrowded. However, this doesn’t mean they are not extremely valuable. For instance, you can use them in finances to analyze your net profit by each quarter of the year. The sizes of the vertical columns can help you spot any under or over-performing quarters at a glance. Plus, they can be mixed with other types of charts, such as line charts, to provide an even deeper look into the data, as we saw in our MRR Growth example.
Although these might be considered the best charts for financial analysis, you should always consider what your analytical aim is and what questions you are trying to answer when picking your visualizations. Here we give you a useful overview to help you choose the right type of business chart depending on your goals.
**click to enlarge**
Financial Graphs And Charts Best Practices
As you have seen throughout this insightful post and our list of 30 interactive examples, charts have the capacity to turn the most complex data points into understandable values that can significantly enhance the decision-making process and drive business growth. That said, financial data is not easy to deal with. While it might sound easy just to build a chart to display your most important performance indicators, there are still a few best practices you need to follow in order to make your visualizations successful. Here we tell you a few of them.
- Think of your goals and audience
The first step to generating successful finance-related visuals is to think about your audience and goals. This is a best practice that you should apply to any analytics-related task or process, especially when it comes to generating data visualizations for finances, as the language and data being used are complex and critical to the correct functioning of the organization.
In that sense, there are two things you should consider. For starters, what are the company’s financial goals? Thinking about this question will help you plan your visuals to tell a compelling story that will allow management and any other stakeholder that needs to use those charts to answer questions and inform their most important strategic decisions. You can also think outside of the box and include some graphics that provide context or deeper insights.
Paired with the general goals, you should also think about your audience. What matters to them, what is their level of knowledge, and what are they expecting to get from these visuals? By putting yourself on the audience shows, you’ll be able to generate visuals that are compelling and engaging. Plus, it will help users that are not very technical with finances to understand the message on each graph easily. We’ll discuss this last point as a separate best practice a bit later in the post.
- Avoid unnecessary elements and be smart
The first best practice for financial data presentation is to avoid cluttering your graphs with unnecessary elements. To avoid this, you should first define a clear goal for the visual you are building. This way, you will be able to clearly distinguish which elements are needed and which ones are not. If you are using more than one axes, make sure that each of them provides value to the point you are trying to show. Otherwise, it can lead to a misleading interpretation of the data.
Another important note here is to be smart about the way you present your insights. For instance, if you use a bar chart to show revenue growth over the past 12 months, it is only natural to order the values by month to see the progression. On the other side, if you are showing revenue growth by the department, it could be a good idea to order them from largest to smallest growth. This allows the audience to understand at a glance the highest and lowest categories.
- Keep a consistent visual identity
Charts and graphs are integral in communicating complex financial information in an intuitive way. That said, when building them, the colors you use can significantly affect how the data is perceived. A carefully selected color palette can help your audience understand the values better, as well as keep them focused during the analysis process. On the contrary, a poor color palette can make the visualization process less effective and harder to understand.
A few good practices for this is to define specific colors for specific topics. For instance, you can use orange every time you will display revenue-related charts and play with the different shades of the color to show different values of revenue. That way, your audience will automatically understand you are talking about revenue when they see the color orange. Another good practice is to keep the colors consistent with the business's visual identity. This makes them more friendly-looking to the audience as well as more professional in general.
- Use understandable language
It is very likely that your financial goals will also affect the rest of the departments in your organization. If you want to increase sales in your online channels, then you need to connect with the marketing department to think of initiatives that can help achieve this objective. That same scenario can happen with several other departments. Hence, the need to make financial data understandable for every user level.
That said, when building your finance statement charts, it is of utmost importance to use friendly language. If you are including acronyms in your axes, make sure you explain what they refer to. The same rule applies to any other type of technical language you include in your representations. You should always keep your audience in mind when building your charts.
- Use interactive elements
Financial data visualizations have been a part of businesses' regular operations for decades now. That said, the practice of generating visuals for the finance department has mutated with the years, shifting from static graphs and charts displayed in a PowerPoint presentation to modern online dashboards containing a mix of interactive graphics that allow users to navigate the data and extract deeper insights. How, you might be wondering? The answer is interactive capabilities provided by modern data visualization software.
Financial analytics tools such as datapine provide users with multiple interactivity options to give users the power to bring their data to life and uncover critical insights. Some of these interactivity features include:
- Drill down: This filter enables you to go into lower levels of hierarchical data all in one chart. For instance, imagine you are looking at revenue per product category and want to look deeper into a specific category. All you need to do is click on that category, and the chart will adapt to show the best-selling products in that category. That way, you’ll be able to find the reasons for certain trends and patterns without going through infinite charts.
- Drill through: Similar to drill-downs, drill throughs also provide extra information from a particular chart, but instead of just going into lower levels of data, it shows the extra data in a popup. For instance, say you have a number chart displaying the total revenue of the year. A drill through would enable the user to click on that chart to see a pop-up displaying revenue by department.
- Time interval widget: This filter lets you visualize different time periods in specific KPIs. For example, you might be visualizing revenue for the past 5 years and realize that year 3 had a huge spike. You can click on that year for monthly or weekly revenue.
These are just a few of the many interactivity options you can include when generating your financial graphics. If you want to know more about this topic, check out our guide on the top 14 interactive dashboard features.
6. Tell a cohesive data story
Expanding on the point above, it is no secret that finance users are acquainted with numbers and formulas, probably more than any other department. That said, in order to achieve a collaborative environment with other relevant business players, the data needs to be displayed in a way that tells a cohesive understandable story. Data visualizations allow non-technical users to identify trends and patterns in the data. However, this is not possible without a correct organization of the different graphs and charts. Modern dashboard software assists you with this task by providing a centralized view of your most important financial indicators.
The image below is a financial dashboard displaying relevant metrics related to profit and loss. Being able to quickly see how the numbers fluctuated over time and how each indicator affected the other allows users to get a complete picture and make informed decisions.
**click to enlarge**
7. Gather internal feedback and adapt
As you’ve learned from this list of best practices, building successful financial data visualizations is a task that requires thoughtful consideration of the design but also of the audience and final use case. That means there’s probably always room for improvement, and you should see that as an opportunity.
After you generate your graphs and charts and present them to the finance team, you should gather feedback from all users and find improvement opportunities to make the process as efficient and personalized as possible. This may sound like an exaggeration, but the way you choose to chart your financial KPIs is going to set the groundwork for future strategic decisions. Therefore, it should not be taken lightly.
Key Takeaways From Financial Charts & Graphs
We have expounded on what graphs to include in financial analysis and explained in detail each of them. We hope these graphs and charts templates have given you the inspiration you need to optimize your overall financial reporting and analysis. If you would like more data-driven, business-based pearls of wisdom, explore these sales report examples that you can use for daily, weekly, monthly, or annual reporting.
To get a more in-depth knowledge of the financial statement graphs essential for your business, you can test datapine for a 14-day free trial!