When communicating profitability to those who aren't accustomed to looking at financial data, I believe the ๐ฌ๐๐ง๐ค๐๐ฒ ๐๐ข๐๐ ๐ซ๐๐ฆ ๐ข๐ฌ ๐ญ๐ก๐ ๐ฆ๐จ๐ฌ๐ญ ๐๐๐๐๐๐ญ๐ข๐ฏ๐ ๐ฏ๐ข๐ฌ๐ฎ๐๐ฅ๐ข๐ฌ๐๐ญ๐ข๐จ๐ง. Here's why:
1. ๐๐ก๐จ๐ฐ๐ฌ ๐ญ๐ก๐ ๐๐ฅ๐จ๐ฐ ๐จ๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐ซ๐จ๐ฆ ๐ฅ๐๐๐ญ ๐ญ๐จ ๐ซ๐ข๐ ๐ก๐ญ
In many cultures, information is read from left to right. The sankey diagram mirrors this flow, starting with how a company generates its revenue (i.e., product revenue) then illustrates what happens with this revenue (i.e., how much ends up allocated to controlling interests)
2. ๐๐ฅ๐๐๐ซ๐ฅ๐ฒ ๐๐ข๐ฌ๐ญ๐ข๐ง๐ ๐ฎ๐ข๐ฌ๐ก๐๐ฌ ๐ค๐๐ฒ ๐๐จ๐ฆ๐ฉ๐จ๐ง๐๐ง๐ญ๐ฌ ๐ญ๐ก๐ซ๐จ๐ฎ๐ ๐ก ๐๐จ๐ฅ๐จ๐ฎ๐ซ
Colour coding helps differentiate between the various parts of the P&L; revenue streams (grey), costs (red), and profits (green)
3. ๐๐๐ฏ๐๐๐ฅ๐ฌ ๐ญ๐ก๐ ๐ซ๐๐ฅ๐๐ญ๐ข๐ฏ๐ ๐ข๐ฆ๐ฉ๐๐๐ญ ๐จ๐ ๐๐ข๐๐๐๐ซ๐๐ง๐ญ ๐ข๐ญ๐๐ฆ๐ฌ
The sankey diagram shows how each category impacts the overall P&L. For example, it illustrates that product revenue is about half the size of service and other revenue, and approximately one-third of total revenue is allocated to cost of revenue
4. ๐๐ฎ๐ฉ๐ฉ๐จ๐ซ๐ญ๐ฌ ๐ ๐ซ๐๐ ๐ ๐๐ ๐ก๐ข๐๐ซ๐๐ซ๐๐ก๐ฒ
The sankey diagram accommodates various levels of detail. For instance, the cost of revenue may be expanded to one further level, while gross profit can be expanded into multiple sublevels, offering flexibility in how much detail is presented
5. ๐๐ฌ ๐ฏ๐ข๐ฌ๐ฎ๐๐ฅ๐ฅ๐ฒ ๐๐ง๐ ๐๐ ๐ข๐ง๐
The balance, symmetry, and flow of a sankey diagram make it far more visually appealing than traditional financial tables. This aesthetic quality helps keep the viewerโs attention
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