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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 is taking 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 financial 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 financial 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?
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Financial graphs and charts visually track liquidity, budgets, expenses, cash flow, and many other financial metrics while helping businesses avoid a monetary crisis by leveraging financial data in real-time, with a comprehensive overview of financial information.
To ensure the best possible performance and financial health of 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 and graphs need to be created with the utmost care and attention. Let's see this in more detail.
Why 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 financial graphs as:
- 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 business, you will be able to set valuable financial goals that result in growth and success. While there are numerous charts out there, we will explain the invaluable ones for any business.
- You will be able to make sense of all the financial data and metrics as they will be split into actionable categories and presented in an intuitive, scannable fashion, 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, and data-rich commercial landscape. As mentioned, manual work is prone to mistakes that 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 graphs that deliver accurate, reliable, and clear-cut financial insights, busy finance 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 financial story and finally create a dashboard that will present all your data on a single screen. Let's see this in more detail.
Which Role Does Financial Data Visualization Play?
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Financial data visualizations such as interactive dashboards are complete with charts and graphs that assist in the tracking of all of your core financial 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 data geared toward reaching valuable financial goals.
A financial dashboard offers all of the data, metrics, and insights needed to ensure the success of your financial performance, cash flow, cash management, and profit and loss analysis. The financial graph example above, associated with our business dashboard not only makes extracting key data swiftly 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 financial graphs serve real-time data that will prove invaluable to the financial future of your business.
Not only your business will have the opportunity to explore, monitor, and access real-time data, but the interactivity levels are an invaluable resource for managing enormous amounts of data, 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 arguable the most important aspect for any business, if something is wrong with your finances most likely all your company will suffer. By using BI dashboard tools such as datapine you will be able to share your financial live data 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 financial data visualization process, your finance department will significantly increase productivity, and decrease costs. Let's see this through our top 20 financial chart templates.
See Our 20 Financial Business Graph Examples
To put the importance of a dashboard-based financial business graph into perspective, here are 20 graphs & chart examples 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 financial graph 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 help you enjoy a greater level of income from each dollar of your sales.
2. Operating Profit Margin
As another profit and loss-centric financial graph, this visual is split into an easy-to-digest percentage gauge in addition to a detailed bar chart and will help 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 financial 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 is also strongly related to the profit and loss area of your finance department's key activities, and this color-coded health gauge will help you gain access to the information you need, even at a quick glance.
The operating expense ratio (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 graph to show profit and loss, but you do need to connect 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 - an incredibly valuable financial chart.
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 financial 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 ratio graph, this particular profit graph makes it easy for busy financial 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 ratio 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 a financial graph that quantifies how swiftly your organization collects your payments owed, thus showcasing your effectiveness concerning 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 chart is incredibly useful as it's a financial performance KPI 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 financial graph 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 on 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. 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 example, 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 their strategies.
If you see that one unit spends significant amounts of financial resources, it would make sense to investigate further and check if the costs are justified or need more attention. By using a relevant online business intelligence software, you can directly interact with all of the data 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.
11. Cost Avoidance
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 example above and organize by supplier category. This metric is not that 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 example, 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 of procurement operations and management, you can explore our set of procurement metrics.
12. Cash Conversion Cycle
The cash conversion cycle (CCC) is a financial metric that helps companies in tracking how much time a company needs to convert its 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 days 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 manually calculate each time you need a report, 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.
13. 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, analytical report can help in this process. When you automate your data and digitalize your analysis 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 months. The goal should be to have the lowest rate possible and avoid any possible business disputes.
14. 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 financial 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.
15. Working Capital
Our next example is the working capital. This is a straightforward graph that gives you an at 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 the 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.
16. Berry Ratio
The Berry Ratio is a financial metric that 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 profit above all variable expenses.
This business graph is a fundamental part of a CFO dashboard, if you track it regularly you can understand on which exact period your profit dropped or increased and draw conclusions to improve your business finances.
17. 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 visually understand if the number is positive or negative. 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.
18. Payroll Headcount Ratio
Our next business graph tracks the Payroll Headcount Ratio. This metric consists of dividing all the HR full-time positions with 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 financial difficulties.
19. 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.
20. Cost Per Hire
We finish our list of financial charts with this straightforward metric that 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. At the end investing in new talents is what will bring more value back to your company.
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 5 of the most common finance charts types to visualize your financial data:
- Line Chart: This type of finance chart is ideal to display 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 analysis 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 the earning 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 your financial data in time.
- Tables: Tables are a classic way of displaying information and they can prove to be really useful to work with your raw data. You can use a table to display a large number of precise measures and dimensions always having the grand total to compare it 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 in terms of colors and shapes. You can accomplish this with the help of a dashboard tool. In finances, you can use tables to display the data of 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 examples 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 fully complete it. The data can be expressed in circle 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.
Although these 5 chart types that we just mentioned are often used for displaying financial data, you should always consider what is the aim of your analysis and what questions are you trying to answer when picking your visualizations. Here we live you a useful overview to help you choose the right type of business chart depending on your goals.
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Key Takeaways From Financial Charts & Graphs
We have expounded on what graphs to include in financial analysis and explained in detail each, and we hope these financial graphs and charts examples have given you the inspiration you need to optimize your overall financial reporting and analysis. If you would like to for 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 financial graphs essential for your business, you can test datapine for a 14-day free trial!