Posts Tagged ‘Common-sized financial statements’

Accountants need to be competent in data visualization.  Strike that.  Accountants should be expert in data visualization.  Data visualization is when numeric data is displayed graphically so as to help interested people understand and interpret it.  To reuse a tired cliche, a picture is worth about 1,000 words, sometimes more and sometimes less.

Most accountants mentally picture columns of numbers in published financial statements when I mention visualizing data.  We understand numbers, but even we employ data visualization techniques.  For example, I can much more easily understand a company’s two years of balance sheets or three years of income statements if they are common sized (converted to a percentage of either total assets for the balance sheet, or a key revenue for the income statement).

Specialists in corporate public relations have for years been inserting line, bar and pie charts into financial statements to help the reader quickly grasp the essence of key numbers in the accompanying financial statements.

Over on AECM, the e-mail listserv for accounting professors, master tax teacher extraordinaire Amy Dunbar (University of Connecticut) shared a link to a Youtube video that shows just how far data visualization has gone beyond what we accountants provide in annual reports.

You must watch this video of Hans Rosling.

Hans Rosling is Professor of International Health at Karolinska Institute and Director of the Gapminder Foundation, which developed the Trendalyzer software system …  Rosling co-founded the Gapminder Foundation together with his son Ola Rosling and daughter-in-law Anna Rosling Rönnlund. Gapminder developed the Trendalyzer software that converts international statistics into moving, interactive and enjoyable graphics. The aim is to promote a fact-based world view through increased use and understanding of freely accessible public statistics. His lectures using Gapminder graphics to visualise world development have won awards by being humorous yet deadly serious.  [from Wikipedia article accessed December 16, 2010.]

A good professor uses a white-board to help students visualize accounting/finance concepts and information.  Isn’t it time we accountants moved into the 21st century and developed some Hans Rosling showmanship?

Debit and credit – – David Albrecht

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