WHICH FORMAT WORKS BEST?
To select the appropriate
graphic, you need to consider three factors: the
message, the nature of the comparison and the
kinds of charts to choose from. Software can help
(see “Some Chart and Graph Software,” at the end
of this article).
The graphic’s message.
After you decide what you want to
say, think about how you want to use the numerical
data to impart the message. Here are five sample
statements much like those found in business
Administrative costs account for more
than 50 percent of total expenses.
Coca-Cola is first in sales among
competing brands of cola for January.
Home Depot’s stock price has risen
steadily during the past 12 months.
Most of our employees fall into the
31-to-40 age range.
Our data show a relationship between
level of formal education and income.
The type of comparison suggests a
format. After you’ve organized
your information for a financial report or
presentation, you’re ready to use a comparison to
illustrate your message. The comparison you make
ultimately determines the type of graphic to use.
For example, a bar chart is an obvious choice for
comparing data across a number of years, and a pie
chart efficiently shows the relationship of parts
of a whole. Essentially, there are five choices:
Percentage of a whole: Pie
chart (see exhibit 1, below, left).
(Administrative costs are more than 50 percent …).
Order in relation to other
elements: Horizontal bar chart (see exhibit
2, below, right). (Coca-Cola is first in sales …
|Exhibit 1: Pie Chart
Horizontal Bar Chart |
Account for Over 50 Percent
of Total Expenses
Coca-Cola Is First in
Sales in January
Change over time: Vertical
bar chart or horizontal line chart (see exhibit 3,
below). (Home Depot’s stock price has risen … ).
|Exhibit 3: Vertical
Bar Chart or Horizontal Line Chart
|Home Depot Stock Has
Risen Steadily Over the Past 12 Months
Intervals between events:
Vertical column or histogram frequency
distribution charts (see exhibit 4, below). (Most
employees fall into the 31-to-40 … ).
|Exhibit 4: Vertical
Column or Histogram Frequency
Distribution Charts |
Fall Into the 31–40 Age Range
Relationship of factors:
Scatter diagram (see exhibit 5, below). (Our
data show a relationship between level of
education and … ).
COLOR STRENGTHENS YOUR VISUALS
A 3M Co. study showed
that audience comprehension and retention improved
significantly when color visuals were used instead
of black-and-white ones. Color creates vivid
demarcations that help your audience grasp
important elements of a graphic, and it can
influence viewers’ emotional responses.
Use colors that make your visuals easy to read.
If a series of charts is used, make sure color is
used in the same way for each graphic. If you use
green for one background, use it consistently
throughout the presentation. In general, dark
colors such as black, navy blue, charcoal gray,
brown or dark green are good background colors.
Foreground colors for text and for graphic
elements such as the bars of a bar chart, for
example, should contrast with background colors.
Light colors such as pale blue or yellow contrast
well and are good for this purpose.
Exhibit 5: Scatter Diagram
A Relationship Exists Between
Years of Formal Education and Income
influences how the brain absorbs information.
Foreground colors affect comprehension and
retention, while background colors set an
emotional tone. Pastels, once considered too
feminine for financial documents, often are used
for a subdued effect where a lot of data must be
shown in a limited space such as a pie chart with
five or more pieces.
Colors in visuals
also should be compatible with culture. For
example, in the United States, green or black is
associated with financial gain and red with
financial loss (as in “in the red”). In many other
countries, these hues do not have the same
statement information may have gotten a
bit easier. Tomorrow’s Software LLC of
Chicago has developed a product that can
import financial and operating numbers
from financial programs and/or
spreadsheets, analyze the information
and present it pictorially with a
separate written analysis. CPAnalyst
takes corporate financial statements and
automatically presents them as numbers,
words and graphics on the same computer
screen, which is divided into four
quadrants. The system prepares monthly,
quarterly, six-month, nine-month and
annual financial statements, developer
Irwin M. Jarett, CPA, PhD, says. The
annual report produces eight financial
statement components showing tabular
data, a graphic representation of the
data and written analyses for each of
the data sets: balance sheet, assets,
liabilities and equity, revenue and
expenses, retained earnings, cash flows,
sales and gross margin (by month) and an
overview based on the DuPont ratios. The
CPA can (and should) edit the written
report. For more information contact
Irwin M. Jarett. Fax: 312-786-1568.
SELECT AN APPROPRIATE TITLE
One of a CPA’s most
important tasks when creating a visual aid is to
give it a foolproof title. You want the reader to
interpret the information contained in the visual
in only one way, so get to the point. When you
write a title, ask the question, “What is the
central idea I want to communicate using the
information in the graphic?” Your answer should be
the gist of the title.
Suppose your firm
has created a horizontal bar chart comparing one
company’s sales with those of other companies in
the same field. You may be tempted to use the
title “Company A’s sales compared with those of
its major competitors.” A better title would be
“Company A’s sales rank second among major
competitors.” You need to tell your audience what
you want them to grasp in simple, direct language.
The problem with the first title is that it
doesn’t say what’s significant about the data.
FINER POINTS OF PRESENTATIONS
Using charts and graphs in a talk.
For many oral presentations, an
audience doesn’t have the benefit of accompanying
text. To simplify information for listeners, keep
a number of points in mind:
Don’t overload your presentation with
charts and graphs. Your goal should be to augment
your remarks, not overwhelm them. Having too many
visuals will reduce the impact of each.
Keep your charts and graphs simple.
Concentrate on making one point and limit the
text. In general, the more quickly your audience
can comprehend a graphic, the more effective it
Use upper- and lowercase letters, not
all capitals. They make the type easier to read.
Italic and sans serif type are more difficult to
read than a simple serif typeface such as Times
Keep the focus on the audience, not
on the visual. Facing your audience, stand to the
right of the visual (which will be left from their
vantage), and point to your visual with your left
hand. English is read from left to right, so your
audience will naturally look from you to the
visual. This helps to maintain a connection with
Comment on the main point you wish
them to grasp to focus audience attention. Once
you have finished talking about the material in
the visual, remove it and move on. If you leave a
graphic in place after it’s served its purpose, it
becomes a distraction.
Using graphics in documents.
In a written report you need to
remember to do the following when using visual
Use no larger than 24-point type
(smaller is probably better) and limit text to
five to seven lines.
Label and number charts and graphs.
Common labels are t able, chart, graph
and illustration. Or call them all
Put a source note at the bottom of
each graphic. This note will tell the reader where
the information in the graphic came from. A source
note may reference primary or secondary data. It
should appear at the bottom of the graphic and
might look like this: “Source: Primary” or
“Source: Bureau of Business Research, Arizona
State University.” The idea is to provide enough
information that your reader can locate the source
to get more information if needed.
Introduce the graphic in the text
before the reader comes to it, so the reader knows
why it’s there.
Place the graphic as close as
possible to the copy it augments. Remember, you
are trying to reinforce a point. A reader will not
look at the graphic if it is at the end of the
WORTH A THOUSAND WORDS
Charts and graphs in
oral and written presentations both simplify and
emphasize important information. The most useful
formats have withstood the test of time: Pie
charts, horizontal bar charts, vertical bar or
horizontal line charts, vertical column or
histogram frequency distribution charts and
scatter diagrams have become classics because they
Choosing the proper format for
conveying financial information requires careful
thought and planning from you. Remember to use
color to improve reader comprehension, to create a
title that pinpoints the main idea, to keep text
to a minimum (if it’s necessary at all) and to
employ visuals appropriately for speaking or
writing. If you do, charts and graphs will become
a powerful communication tool for your reports.
Chart and Graph Software
$399. Windows compatible.
Features include organization charting,
network diagramming, floor planning and
Web site mapping.
Harvard Chart XL 2.0
$135. Windows compatible.
Features include templates for more than
300 business, statistical and technical
charts, the option to view data and
charts simultaneously and to import and
export both data and charts.
|DeltaGraph Pro 3.5
Chicago, Illinois 60606
$299. Windows and MacIntosh
compatible. Features include 80 chart
types and 200 chart styles, the ability
to integrate pictures into actual
charts, graphic exporting and the use of
the Pantone Matching System.
Lotus 1-2-3 Millennium Edition
New York 10604
$282. Compatible with
Lotus Notes, ERPs
and databases. Features include Web
tables, Web publishing and creating
hyperlinks, SmartFill, Smart Labels and
|Microsoft Excel for Windows
1 Microsoft Way
$340. Windows compatible. Features
include calculation and formatting
assistance, online help, navigation
assistance, analytical tools and
integration filters for Lotus 1-2-3 and
Quattro Pro data.