business performance

• Line Graph


  Shows data presented as lines, making it easy to identify trends, especially if time is on the horizontal axis
• Bar Charts 


  shows data presented so that the height of the bar represents the quantity involved - good for making comparisons
• Pie Chart


  shows data presented in a circle, with each slice of the pie representing a proportion of the whole - good for proportions of a total, e.g market share
• Advantages of Line Graphs

  • Good for data shown over many time periods
  • Good for looking at how one factor affects another, e.g sales in pounds and then money spent on advertising
• Disadvantages of Line Graphs

  • Too many lines can be confusing, so they can only be used to compare 2 or 3 series of data
  • There is a risk of oversimplifying in assuming that an upward line will stay upward in the future
• Advantages of Bar Charts

  • good for data shown over 2 or 3 time periods
  • good for comparing the size of several different items, e.g population of countries
• Disadvantages of Bar Charts

  • cannot easily be used to compare data over many time periods
  • too much data gets confusing to the eye
• Advantages of Pie Charts

  • good for showing proportions, e.g market share
  • size of circle can be made proportional to the quantity it represents
• Disadvantages of Pie Charts

  • Pies show big differences clearly, but for small differences a bar chart is clearer
  • they cannot show trends over a number of years
• Financial Data

  • gross profit margins
  • net profit margins
  • average rate of return
  • profit or loss on any individual deal
  • break even point
  • cash flows
• Marketing Data

  • analysis of a company’s own sales figures
  • market research data on customer opinions on business products
  • secondary or primary sources
• Market Data

  • Analysis of data on market size
  • What markets to enter
  • If there is growth or shrinkage in market size
  • Helps to know where to invest funds and how to develop new products
• Use of Financial Info in Understanding Business Performance

  • measures profitability
  • tracks cash flow
  • compares performance
• Limitations of Financial Info in Understanding Business Performance

  • can be outdated
  • ignores external factors
  • doesn’t measure qualitative success
  • doesn’t show non-financial factors
• Use of Financial Info when Making Business Decisions

  • supports investment decisions
  • aids in budgeting
  • shows trends in profit, cash, balance, market share etc.
  • helps manage debt
• Limitations of Financial Info when Making Business Decisions

  • Doesn’t predict future trends
  • Can be misleading without context
  • Numbers do not always represent facts
  • Managers cab put bias in their interpretation of data
  • They may not accept fault and blame and instead blame other factors