6 Data Analysis Methods to Help You Make Great Financial Statements FineReport | BI Reporting and Dashboard Software

6 Data Analysis Methods to Help You Make Great Financial Statements

The year is coming to an end, and if any of you work in the relevant departments of the company’s financial accounting, you must be busy preparing various annual financial statements. Especially for beginners who have just entered this field, how to design reports to clearly show the financial analysis and business operation status is a challenge.

In the financial statements, compared to traditional dense tables, charts can visualize the data and display the data more intuitively, making the comparison, trend and structure of the data clear at a glance. This article analyzes the types of charts in financial statements from summary data analysis, development trend analysis, data comparison analysis, composition analysis, progress analysis, and map analysis. I hope all of us can present really good financial statements at the end of the year.

(Note: All the charts and dashboards in this article are made with the BI reporting tool FineReport.)

1. Summary Data Analysis

Summary data analysis is usually used to count key core indicators, such as the company’s annual operating income, annual consumption costs, and annual net profit, which are often the data that decision makers are most concerned about.

As shown in the figure below, we use the dashboard component of FineReport to calculate the three core indicators: the company’s total annual revenue, annual cost, and net profit. We set the maximum range of the dashboard to a total revenue of 278 million, and enable the function of displaying percentages. In this way, the two indicators of consumption cost ratio and profit margin are automatically displayed.

Here is another example of summary data analysis.

From FineReport

2. Development Trend Analysis

Development trend analysis is usually used to visually compare the financial operating data or financial ratio trends of a certain continuous interval of the enterprise, and to understand the trend of the financial situation of the enterprise over time. On the one hand, it is possible to analyze whether there is an abnormality in the data increase or decrease, to find possible problems in the enterprise. On the other hand, it can also help the enterprise predict the future financial situation and judge the development prospect.

We generally use line charts to show the development trend of the company. The horizontal axis represents time (year, month, and day), and the vertical axis represents indicators such as operating income, costs, and profitability.

The following dashboard report is an example that combines summary data analysis and development trend analysis.

From FineReport

3. Data Comparison Analysis

Data has no value without comparison, and the same is true in corporate financial analysis. Through the comparison of various indicators, we reveal the financial status, operating conditions and cash flow of the company. Generally speaking, the reference standards for comparative analysis are as follows.

  • Time comparison: compare with the actual data of the previous period and the same period of last year.
  • Entity comparison: compare with the data of advanced companies in the same industry.
  • Result comparison: compare with the plan or budget data.
  • Structural comparison: based on the composition analysis, compare the structure of the two data and analyze the changes in financial indicators.

Bar charts and histograms are often recommended for data comparison analysis. In addition, you can use other charts according to the specific situation, such as the line chart to show the inventory comparison of several companies, and a radar chart (suitable for quick comparison and positioning of weaknesses) can be used to compare the classification statistics of financial indicators.

The following dashboard uses bar chart, histogram, and radar chart. We can also refer to such a dashboard report when doing financial statement analysis.

From FineReport

And here is a financial dashboard which combines Donut chart, histogram and radar chart.

From FineReport

4. Composition Analysis

Composition analysis can usually be used to analyze the data of each project’s constituent elements, such as sales composition analysis of each product, current asset composition analysis, and management cost composition analysis of each department. It represents the composition of the data structure. In terms of charts, pie charts, donut charts, percentage stacked bars and percentage stacked histograms are common for composition analysis.

In addition, when you need to analyze both the composition structure and the hierarchical structure of the data, multilevel pie charts are undoubtedly the best choice. As shown below, multilevel pie chart makes it easy to calculate the proportion of sales in each province and city.

Here is a cash flow report in which pie chart and histogram are used.

From FineReport

5. Progress Analysis

In the financial statements, it is often necessary to show the progress of achieving an indicator or a task, such as the performance of department and the progress of reporting expenses. In this case, we can use stacked column charts, stacked bar charts, and Gantt charts to display data.

6. Map Analysis

Finally, I will introduce the data analysis method related to maps. For large enterprises, in addition to the headquarters, there are branches throughout the country and even the world. In situation like this, using maps to analyze data based on geographic location is more appropriate.

From FineReport
  • Flow Map

The flow map displays the interaction data between the outflow area and the inflow area. It is usually expressed by the line connecting the geometric centers of gravity of the spatial elements. The width or color of the line indicates the flow value.

The flow map is mostly used in regional trade, traffic flow, population migration, shopping and consumption behavior, communication information flow, and aviation routes.

From FineReport
  • Heatmap

The heatmap is used to indicate the weight of each point in the geographic area. In addition to the map as the background layer, you can also use other images. And color in a heatmap usually refers to density.

In the end

The above are the six data analysis methods and corresponding charts that we commonly use when making financial statements, which can be used as a reference when you make data analysis statistics. In addition, the charts in this article are made with the BI reporting tool FineReport. Its personal version is free to download and use, and it provides many templates for beginners to learn. You can try it yourself.

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