Question

Charts" Charts are flexible visual aids and an invaluable resource in Excel. While accountants use them to illustrate key data such as financial statement analysis, they have many other accounting-related uses. Identify and discuss at least three (3) ways accountants could use charts with a focus on providing benefit to the reader. Justify your response.

Answer 1

Charts depicts liquidity, budget, cash flow and helps business in reducing monetary crisis with the help of data on real time basis. Three ways accountants could use charts with a focus on providing benefit to the reader are:

1. Operating Profit Margin
Detailed Bar Chart helps in calculating Earnings Before Income & Taxes accurately. The higher the operating income, the business will be more profitable. Financial chart helps in providing a mix of historical data and current data on a real time basis.

2. Current Ratio

Financial chart tracks the liquidity ratio which shows whether the company is able to pay its current liabilities. Bar chart is prepared to present data and spot trends. Financial chart ensures whether the company will be able to meet its obligations and commit payments.

3. Accounts payable turnover ratio

Accounts payable turnover ratio is a liquidity ratio that ensures whether the company can pay its expenses on time. Historical information can be presented in the form of bar chart that shows turnover percentage over different periods of time. A higher ratio gives suppliers assurance that company will pay its expenses on time.