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Data Visualisation: Choosing a Chart That Does Not Mislead

A chart earns its place when the reader needs a shape and a table wins when the reader needs a value. Choose the chart from the shape: a movement over time, a comparison across categories, a part against a whole, or a relationship between two measures. Correct numbers mislead through the axis, the units and the caption, so check all three.

A chart is a claim drawn rather than written, and a reader takes in a drawn claim faster than a written one because the picture lands before the sentence does. The eye has already settled which bar is tallest while the heading above it is still being read. The speed is the entire value of a chart and the entire danger of one. Keeping the drawn claim and the true claim the same thing is the whole discipline.

One assignment runs underneath this guide from beginning to end. The Kavery research desk, four people inside an invented firm called Kavery Capital Services Private Limited, prepared a research note on Meenakshi Tubes Private Limited. Sharada Iyer wrote it, Prakash Nadar reviewed it, and Latha Menon commissioned it and took the decision at the end. The analysis is already finished and every number in it has already been agreed. Some of those numbers now have to become pictures.

The product Meenakshi Tubes Private Limited actually manufactures never matters to a single rule that follows. A chart is chosen from the shape of the data and never from what the data means. The rules concern lengths, areas, axes and labels rather than businesses. Substitute a bond, a fund, a warehouse or a single machine and not one of them needs rewriting. Chart choice as a named practice belongs to Cole Nussbaumer Knaflic, whose Storytelling with Data, 2015, is where most working analysts first meet the idea that a chart is a decision somebody made rather than a default the software handed over.

Which question comes before choosing a chart at all?

Almost everybody starts in the wrong place. Numbers arrive, the numbers feel important, and the next move is to pick a chart type. The first question is not which chart, it is whether a chart at all, and skipping that question is where most poor exhibits are born. A chart is not a neutral container for numbers. Drawing something makes a claim about it that the numbers alone did not make, and a claim nobody intended is an error added to a correct set of figures.

Two numbers show what happens. Stating that operating profit was Rs 2,30,00,000 in the year just reported against Rs 2,21,00,000 in the prior year states two values. Drawing those same two values as a line says something extra and unbidden: that there is a slope here, that it continues, and that the movement between the two points is the story. Two points always make a perfectly straight line, so a two point line chart looks like a trend whatever the underlying figures do. Nobody typed a false number. The picture added the claim by itself.

Here is the everyday version. A household writes down what it spent on vegetables in January and in February. Two numbers on a slip of paper is a record. Draw them as a rising line taped to the fridge and the household has quietly told itself that vegetable spending is climbing. Two months cannot possibly establish that. The slip of paper was honest and the line on the fridge is an argument.

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Data Visualisation vs Data Table: what does each one do that the other cannot?

Both are ways of putting numbers in front of a reader and they fail at completely different jobs, so each one is worth defining fully before they are set against each other.

A data visualisationA claim about numbers made as a picture rather than a sentence. turns quantities into visual properties. A number becomes a length, an area, a position along a scale, an angle or a shade, and the reader compares those properties instead of comparing digits. The substitution is what makes a chart fast. Comparing two lengths takes no conscious effort at all. Comparing Rs 4,80,00,000 with Rs 5,20,00,000 takes a second or two of genuine reading. The price of the substitution is precision. Nobody reads a value off a bar to the rupee, and nobody is meant to.

A data tableThe same numbers laid out so each value can be read exactly. keeps the numbers as numbers and arranges them so that any one of them can be found and read exactly. A table makes no claim about shape at all. A table will not announce that one row towers over another; a reader has to work that out by reading. In exchange it gives the figure to the last digit, it lets a reader recompute the arithmetic, and it survives being copied into somebody else's work without losing anything.

The two are not ranked against each other, they are aimed at different readers doing different things, and the whole choice turns on which reader the exhibit actually has. A reader who is going to quote the figure, key it into something else, or check whether it matches a filing needs a table and is actively hindered by a chart. A grid of digits gives up its shape slowly or not at all, so a reader who is going to look once, take away an impression and move on needs a chart and is actively hindered by a table.

QuestionA data visualisationA data table
What does it hand the readerA shape, taken in at a glanceA value, readable to the last digit
What is it poor atPrecision. Nobody reads a bar to the rupeeShape. A grid gives up its pattern slowly
What does it add that nobody typedA claim about relative size, trend or proportionNothing. It states the figures and stops
How many items does it handle wellMany. A hundred points is still one shapeFew. Twenty rows is already hard work
What can a reviewer do with itChallenge the encoding, the axis and the captionRecompute every figure in it
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How is the table-or-chart test run on a real exhibit?

The test is one question and it is about the reader rather than about the data: what is this person going to do with the exhibit, read a value off it or see a shape in it? The amount of data decides nothing and the reader decides everything, so the question is what the reader will do with the exhibit rather than how much data is in hand. Four numbers can absolutely be a chart if the reader only needs the shape, and two hundred numbers stay a table if somebody has to reconcile them line by line.

In practice a rule of thumb does most of the work. The shape of four numbers can be stated in one sentence and does not need a picture at all, so four numbers that somebody will want to read precisely is a table almost every time. When four numbers are about to be drawn, the sentence is worth writing first, and then checking whether the sentence was all that was needed. Usually it was.

One question decides it, and the question is about the reader rather than the data. WHAT WILL THE READER DO WITH THIS EXHIBIT? READ A VALUE OFF IT, OR SEE A SHAPE IN IT? READS A VALUE OFF IT SEES A SHAPE IN IT A DATA TABLE A CHART WHAT IT HANDS OVER Every value, to the last digit, checkable against the document it came from. HERE: TWO MEASURES ACROSS TWO YEARS Four numbers. It was drawn, then cut, then typed. WHAT IT HANDS OVER One shape, taken in before the reader has finished the heading above it. HERE: FOUR QUARTERS, AND TWENTY ONE POINTS Both survived review. Neither is read to the rupee. RULE OF THUMB: FOUR NUMBERS SOMEBODY WILL WANT TO READ EXACTLY IS A TABLE ALMOST EVERY TIME. The amount of data decides nothing here. The reader decides everything, and the reader is the only thing the question asks about.
Whether an exhibit becomes a table or a chart is settled by asking what the reader will do with it, and four numbers meant to be read exactly went into a table.
Try it out

The Kavery research desk held operating margin and revenue for two years: two measures across two periods. Chart or table?

Which four shapes cover almost everything an analyst has to draw?

Once a chart is warranted, the chart type is not a matter of taste. The shape of the claim, rather than the shape of the spreadsheet, is what decides, and the chart then picks itself. Four shapes cover almost everything a working analyst produces: a movement over time, a comparison across categories, a part against a whole, and a relationship between two measures. Habit means whichever chart the last exhibit used, so picking by habit rather than by shape is where most poor charts start.

Four shapes, four charts. The shape of the claim picks the chart, not the shape of the spreadsheet. A MOVEMENT OVER TIME A LINE The path between points is the whole claim. A COMPARISON ACROSS CATEGORIES THE ONE THAT TOWERS BARS FROM ZERO Relative size is the claim. Here: the four quarters. A PART AGAINST A WHOLE ONE HUNDRED PER CENT Three parts, one baseline, no gap. A STACKED BAR The parts must sum to the whole, with none missing. A RELATIONSHIP BETWEEN TWO MEASURES POINTS ON TWO SCALES Here: the scenario curve, twenty one points in order. Two of these four are the shapes that survived review here, named in the note under each panel. The other two were never the right shape.
A movement over time calls for a line, a comparison across categories for bars from zero, a part against a whole for a stacked bar, and a relationship between two measures for points on two scales.

Shape one, a movement over time: which chart does that shape call for?

A movement over time means one measure observed at points along a continuous timeline, where the claim concerns the path between the points rather than any single point on it. A movement over time calls for a line, and the reason is exact. The horizontal scale is continuous, so the space between two points genuinely means something, and joining them therefore means something too. A line says the measure passed through the space between the observations, and along a real timeline it did.

Two conditions have to hold before one is drawn. Unequal gaps drawn at equal widths distort the slope without touching a single value, so the observations should be evenly spaced in time. And there have to be enough observations for a path to exist at all. Three points is not a path, it is three points with two straight segments the software invented. The scenario curve below carries twenty one observations, and twenty one is a shape.

Shape two, a comparison across categories: when do the bars turn horizontal?

A comparison across categories means several separate things measured the same way, where the claim concerns relative size. Bars, always, and from a zero baseline. Length is what carries the number here: a bar twice as long has to mean twice as much, and length only stays proportional if the measurement starts at nothing.

Time can run along the bottom of the chart while the shape is still a comparison rather than a movement, and that combination trips people more than any other. Four quarters looks like time, so the reflex is a line. Ask which claim the exhibit is making. If the claim is that one quarter towers over the other three, that is a statement about relative size and it is bars, with time merely deciding the left to right order. If the claim is that the measure has been climbing quarter after quarter, that is a path and it is a line. The Kavery research desk wanted the first of those, so the quarterly exhibit is a bar chart.

Past about six categories the bars turn on their side, and the reason is prosaic rather than statistical. Category labels are words, words run horizontally, and a vertical bar gives its label only the width of one bar to sit in. Once the label is wider than the bar pitch the software tilts it, and a tilted label is read more slowly than a flat one because the reader has to work at an angle. Turn the bars horizontal and every label gets a full line of reading width, sitting flat where the eye already is. Horizontal bars are not a stylistic preference past six categories, they are what happens when the labels stop fitting.

The same nine categories twice. Only the layout changed, and one of them is read at normal speed. NINE CATEGORIES AS VERTICAL BARS: EVERY LABEL HAS TO TILT Each label gets the width of one bar to sit in. Past about six categories, that stops being enough and the tilt arrives whether it was wanted or not. CATEGORY ONE CATEGORY TWO CATEGORY THREE CATEGORY FOUR CATEGORY FIVE CATEGORY SIX CATEGORY SEVEN CATEGORY EIGHT CATEGORY NINE THE SAME NINE AS HORIZONTAL BARS: EVERY LABEL LIES FLAT CATEGORY ONE CATEGORY TWO CATEGORY THREE CATEGORY FOUR CATEGORY FIVE CATEGORY SIX CATEGORY SEVEN CATEGORY EIGHT CATEGORY NINE Flat labels, read at normal speed, and the ranking now reads top to bottom, as text does. Schematic. No values are printed, because what is being compared here is the layout rather than any data.
Nine categories drawn as vertical bars force every word label to tilt, while the same nine drawn horizontally let each label lie flat and read top to bottom.

Shape three, a part against a whole: why does this shape get drawn wrongly most often?

A part against a whole means one total broken into pieces, where the claim concerns how much of the total each piece takes. A part against a whole is the shape most often drawn wrongly, and it is wrong before the drawing starts. Three conditions have to hold, and nobody checks them. The pieces must sum exactly to the whole. The pieces must be mutually exclusive, so nothing is counted in two of them. And every piece must be present, including the small ones nobody cares about.

Break any of the three and the picture lies while every number in it stays correct. Pieces that do not sum to the whole make each piece look larger than it is. Pieces that overlap double count. Pieces quietly dropped for being small make the survivors look bigger. The missing category set below is the same device.

Given the three conditions hold, a single stacked bar read against one baseline beats a circle cut into wedges, for a reason taken up again below: a reader compares lengths accurately and compares angles and areas badly. A stacked bar encodes each piece as a length along one common line. A circle asks the reader to compare wedges that share only a centre point.

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Shape four, a relationship between two measures: when is a second axis warranted?

A relationship between two measures means each observation carries two numbers, and the claim concerns how one moves with the other. Each point is positioned by both measures at once, and position along a scale is the most accurately read of all the visual properties. Where the observations have no natural order, they stay unjoined and the cloud makes the claim. Where one of the two measures runs in order, joining them gives a curve rather than a cloud. The scenario exhibit in this assignment is the second kind: the horizontal measure runs from zero upward in steps, so the twenty one points join into a path.

A dual axisTwo different scales on one chart, one on each side. is warranted in one narrow case: when the reader has to see two measures in different units against the same horizontal scale, and the claim concerns the timing of their turns rather than their relative size. The moment a second vertical scale appears, the two lines stop sharing a ruler, and the reader loses the ability to compare the two heights. Anybody drawing one has to know that they have traded away comparison to buy timing, and most people who draw one have not made that trade deliberately.

Try it out

Sharada Iyer wants to show that Q3 at Rs 6,40,00,000 is much larger than the other three quarters. Which shape is that, and which chart does it call for?

How does a chart built from correct numbers mislead its reader?

Choosing the chart is only half of it. The work after the choice is where a careful analyst separates from a quick one. A chart can be built from figures that are correct to the rupee, checked twice and traceable to a filing, and still leave the reader holding something false. Four devices do it, and not one of them requires a wrong number anywhere on the exhibit.

The first is the axis startThe value the vertical scale begins at, which sets how large a change looks.. Begin the vertical scale somewhere other than nothing and every bar keeps its correct value while losing its correct proportion. The second is the truncated category setShowing some of the categories and not saying which are missing., where the bars drawn are all correct and some of the bars that exist are simply not there. The third is the dual axis, where two scales in one frame can be slid against each other until the two lines cross wherever the author would like. The fourth is encodingThe visual property, length, area or position, that carries the number., where the quantity is handed to the reader as an area while the drawing was scaled by width.

Four ways to mislead without typing a single wrong number. Three can be caught. One cannot. ONE. THE AXIS THAT DOES NOT START AT ZERO 9 Every bar keeps its correct value and loses its correct proportion. A small fall can fill a third of the frame instead of a tenth. CATCHABLE. A CAREFUL READER LOOKS AT WHERE THE AXIS STARTS It is the most visible of the four, and the easiest to put right. TWO. THE CATEGORY SET WITH A MEMBER MISSING GONE Every bar drawn is correct. The set of bars is not complete, and a reader assumes a set is complete unless the chart says otherwise. CATCHABLE, BUT ONLY IF THE READER COUNTS THE CATEGORIES A reader outside the work has no idea what the count should be. THREE. TWO AXES SCALED TO CROSS AT A CHOSEN POINT Two units, two rulers, one frame. Slide either scale and the crossing point moves to order, without touching a single value. CATCHABLE ONLY IF THE READER CHECKS BOTH SCALES Almost nobody checks the second one before believing the picture. FOUR. AREA USED WHERE LENGTH WAS MEANT WIDE TWICE AS WIDE The width was scaled by the ratio. The eye reads area, which grew by the square of the ratio, and the chart never says so anywhere. NOT CATCHABLE AT ALL, WHICH IS WHAT MAKES IT DIFFERENT The misreading happens before any figure on the chart has been read.
An axis that does not start at zero, a category set with members quietly missing, two axes scaled to cross at a chosen point, and area used where length was meant: four ways to mislead with correct numbers.

The category set with members missing

Take the second device on its own. The missing category feels least like a trick while doing the most damage. A reader looking at a chart of categories makes one assumption without ever noticing they made it: that the categories shown are all the categories there are. Show three quarters out of four and the reader does not think a quarter is missing, the reader thinks the year had three quarters in it and reads all the proportions accordingly.

Including everything is sometimes genuinely impossible. The fix is to say on the chart what is not there and why. A line under the exhibit reading that the fourth quarter is excluded, and the reason, restores the reader to the position of knowing what they are looking at. Everyday version: a shop that shows three quotations and does not mention the fourth is not lying about any of the three, and the customer still walks out with a false idea of the range.

Try it out

An exhibit shows the three largest quarters of the year and leaves out the fourth, and every bar drawn on it is correct to the rupee. What has to happen before it goes out?

The encoding, which is the one the reader cannot see happening

The fourth device is different in kind from the other three and deserves its own treatment. Encoding is the visual property that carries the number: a length, an area, a position along a scale, an angle, a shade. Every chart picks one, most people never notice a choice was made, and the choice decides how accurately the reader can read the picture at all. Position along a common scale is read most accurately, length against a common baseline next, and area, angle and shade a long way behind.

Here is the whole problem in one line. The eye takes in area, and area grows as the square of width. A shape drawn a certain number of times wider therefore does not look that many times bigger, it looks the square of that many times bigger. A circle scaled to twice the width to show a quantity that doubled covers four times the area. The reader reads four. Nothing on the chart is wrong and nothing on the chart says so.

Scale a shape by width and the area moves by the square of the same number. Count the tiles. A SQUARE TWICE AS WIDE HOLDS FOUR COPIES ONE UNIT WIDE 1 2 3 4 TWO UNITS WIDE, FOUR TILES A CIRCLE OBEYS THE SAME ARITHMETIC, UNCOUNTABLY ONE UNIT WIDE TWO UNITS WIDE THE WIDTH RATIO 2.0 THE AREA RATIO 4.0 WHAT THE READER TAKES AWAY FOUR TIMES, NOT TWO TIMES The squares prove it by counting. The circles cannot be counted, which is exactly why nobody notices the same thing happening to them.
A square drawn twice as wide holds four copies of the original, and a circle drawn twice as wide obeys the same arithmetic while offering the reader nothing to count.
Try it out

Which of the four devices has the reader no way of noticing, even while checking every figure printed on the chart?

The panel below puts both encodings on screen at once so the gap can be watched opening. At a ratio of 2.00 the bar reads 2.00 times and the circle reads 4.00 times, so a doubling is shown to the reader as a quadrupling. At a ratio of 1.50 the bar reads 1.50 and the circle reads 2.25. At 3.00 the bar reads 3.00 and the circle reads 9.00. The overstatement is never fixed, it is equal to the ratio itself, so the bigger the true difference the bigger the exaggeration on top of it.

Try it out

A quantity doubled, and somebody drew it as a circle twice as wide. Before the control below is moved: what multiple does the reader see?

Play with it

Move the ratio between two quantities, and watch one encoding tell the truth while the other one does not.

One control moves: how many times larger the second quantity is than the first, from 1.00 up to 3.00. Both panels are then handed exactly the same pair of numbers. On the left the ratio becomes a bar length. On the right it becomes a circle scaled by width, exactly what happens when somebody drags a corner. The two readings sit on top of each other at 1.00 and separate the moment the control moves away from it.

The dashed outline is the honest comparison rather than the drawn one:
Ratio between the two quantities: 2.00 times
ONE NUMBER MOVES: THE RATIO BETWEEN THE TWO QUANTITIES. BOTH PANELS GET THE SAME PAIR. DRAWN AS LENGTH Bar length is scaled by the ratio. THE BASE QUANTITY THE COMPARED QUANTITY Both bars start at the same baseline, so length stays proportional. WHAT THE READER TAKES FROM THE LENGTH 2.00 TIMES Which is the true ratio, exactly. DRAWN AS AREA Circle width is scaled by the same ratio. THE BASE QUANTITY THE COMPARED QUANTITY WHAT THE READER TAKES FROM THE AREA 4.00 TIMES Which is 2.00 times the true ratio. Solid fill: the circles as they were actually drawn, with the width scaled by the ratio. Dashed outline: the width that would have made the area itself honest at the same ratio. Both panels encode exactly the same two quantities. Only the encoding differs, and only one of them is read correctly. Educational illustration. No figure from the assignment appears here, because the effect has nothing to do with what is measured.
Both panels carry the same pair of quantities, one 2.00 times the other. The bar is drawn 2.00 times as long, so the reader reads 2.00 times. The circle is drawn 2.00 times as wide, which covers 4.00 times the area, so the reader reads 4.00 times. The picture overstates by 2.00 times.
The true ratio
2.00 times
What the bar reads
2.00 times
What the circle reads
4.00 times
The overstatement
2.00 times
Educational illustration. One control moves: the ratio between the two quantities, from 1.00 to 3.00 times. Everything else is pinned. The base quantity never changes, both drawings receive exactly the same pair of numbers, and every bar is measured from the same baseline. The circle is scaled by width, exactly what a drawing tool does when a corner is dragged, and area is what the eye takes in. The effect does not depend on what is being measured, so the panel carries bare quantities rather than any figure from the assignment.

Set the control to 2.00 and the panel returns the worked case exactly: the bar reads 2.00 times and the circle reads 4.00 times. Now walk it up to 3.00. The bar reads 3.00, still the truth, and the circle reads 9.00. The dashed outline is the width the circle should have had for its area to carry the ratio honestly, and the distance between the dashed outline and the solid edge is the whole of the deception, drawn. Length is the safe default for almost every quantity precisely because the reader cannot be wrong about it, and area is a choice that has to be earned.

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Where should a vertical axis start, and when is starting elsewhere honest?

The rule has two halves and almost everybody remembers only the first one. On a chart whose claim is the size of a change, the vertical axis starts at zero, and there is no exception to that half. The reason is not etiquette. Length is the encoding, the reader compares lengths, and a length only stays proportional to a quantity if the measurement began at nothing. Cut the bottom off and the bars stop being lengths of anything at all; they become lengths of the leftover after an amount the author chose to hide.

Here is the half people forget. When the claim concerns the level rather than the size of the movement, starting somewhere other than zero is honest and often the only way to see anything. A measure that sits between 10.7 and 10.9 all year, plotted from zero, is a flat line telling the reader nothing. Plotted from 10.5 it shows what it actually did. The exhibit is then making a claim about position rather than about magnitude, the two are different claims, and the caption has to say which one it is making and where the scale begins.

So the working rule is a pair. The first move is to ask which claim the picture is making. If it claims that something moved by a lot, the axis starts at zero. If it claims that something is sitting at a particular level, the axis may start anywhere, provided the starting value is printed in the caption where the reader will find it without hunting.

The chart that was correct and misled anyway

The Kavery research desk drew operating margin for two years, and every number on it was right. The margin fell from 12.0 per cent to 10.8 per cent, a fall of 1.2 points. The frame stopped at 13 per cent. Drawn from zero, that 1.2 point fall takes up 9.2 per cent of the height of the frame, a visible decline that looks like one. Drawn from 9 per cent, the same 1.2 points takes up 30.0 per cent of the frame: three and a quarter times as much, and it reads as a collapse.

Nobody typed a wrong figure and nobody intended anything. The margins were fine. Prakash Nadar caught it in review by looking at where the scale started rather than by recomputing anything. The person who drew it was being honest, so being honest is not what protects the axis. A rule is. The rule is the one above: when the claim is the size of a change, the axis starts at zero.

Same two figures. Same frame top. The lime block is the identical 1.2 point fall in both panels. AXIS FROM ZERO. FRAME TOP 13 PER CENT. 0 5 10 13 1.2 PTS PRIOR YEAR, 12.0 JUST REPORTED, 10.8 The lime block is 9.2 per cent of the height of the frame. A visible decline. AXIS FROM NINE. FRAME TOP 13 PER CENT. 9 10 11 12 13 1.2 PTS PRIOR YEAR, 12.0 JUST REPORTED, 10.8 The identical block is now 30.0 per cent of the frame. It reads as a collapse. SAME NUMBERS, SAME FRAME TOP. THE SECOND PICTURE MAKES THE FALL LOOK 3.25 TIMES LARGER. Both panels use 12.0 per cent and 10.8 per cent, invented figures from an invented assignment. Only the axis start differs between them.
The same fall of 1.2 points fills 9.2 per cent of the frame when the axis starts at zero and 30.0 per cent when it starts at nine, which is three and a quarter times as much from identical figures.
Try it out

When is starting a vertical axis somewhere other than zero honest rather than misleading?

The axis did the misleading, not the figures. See where honest truncation starts.

What does a caption owe the reader, in exactly two lines?

A captionThe line under a chart stating in words what it shows. is not a title and it is not a label. A title names the exhibit and a caption states its content, and the difference matters more than it sounds because of what happens to an exhibit after it leaves the analyst's hands. Somebody screenshots it into an email. Somebody quotes it in a memo. Somebody reads the deck as a document six weeks after the meeting, with nobody in the room to explain it. In all three cases the picture arrives without its author.

Two lines, and the shape of them is fixed: line one says what is drawn, and line two says the one thing to notice in it. Line one carries the measure, the period and, where it matters, where the vertical scale starts. Line two carries the claim. A person quoting the exhibit in running text keeps the sentence and drops the picture, so line two is the line that survives. A caption reading Operating margin, two years is a label. The label says what is drawn, stops there, and leaves nothing behind at all when the chart is stripped away.

The exhibit is not the picture. It is the picture plus two lines, and only the lines can be quoted. EXHIBIT ONE, AS IT APPEARS IN THE DELIVERABLE Q1 Q2 Q3 Q4 Revenue by quarter for the year just reported, drawn from zero. Q3 carries Rs 6,40,00,000, close to a third of the year, and one order sits inside it. Revenue by quarter. WHAT LEAVES THE ROOM WITH THE READER The picture stays behind in the deck. The sentence travels into the next memo. 1 LINE ONE: WHAT IS DRAWN The measure, the period, the axis start. 2 LINE TWO: WHAT TO NOTICE The claim. This is the line that survives. 3 THE VERSION THAT WAS CUT A label, not a caption. Nothing survives it. With the picture covered, the two lines underneath should still say something. If they do, the caption is doing its job.
An exhibit is the picture plus two caption lines, one saying what is drawn and one saying what to notice, and only the second line survives being quoted in text.
Try it out

With the picture covered, the caption underneath reads: Operating margin, two years. Is that caption doing its job?

How is a chart tested before it goes out?

Three tests, and each one takes under a minute. Each of the three catches a fault the other two walk straight past, so run all three on every exhibit.

Test one: cover the picture and read the caption alone. If the caption still tells somebody something they did not know, the exhibit will survive being quoted. If it reads as a label, rewrite the second line before anything else.

Test two covers the caption and leaves only the picture, and what the picture appears to claim is said out loud. If that sentence is stronger than, or different from, what was meant, the picture is making a claim nobody wrote, and the usual culprit is the axis or the encoding.

Test three reads the furniture out loud. Where does the vertical scale start. What are the units and are they the same on both sides. How many categories exist and how many are drawn. A fault looked at forty times becomes invisible to the eye and stays audible to the ear, so reading it aloud matters more than it sounds.

Try it out

The Kavery research desk built three charts for this assignment. Before reading on: how many of them survived review?

What happened to the three charts in this assignment?

Three charts were drawn and two went out.

The exhibitThe shape it carriesWhat it became
Operating margin and revenue, two yearsFour numbers a reader wants to read exactlyCut, and typed as a table
Revenue for the four quartersA comparison across categoriesBars from zero, and it survived
Margin against the share of revenue that does not repeatA relationship between two measures, in orderA line of twenty one points, and it survived

The one that was cut is worth a sentence on its own. The cut exhibit carried operating margin of 12.0 per cent and 10.8 per cent against revenue of Rs 18,40,00,000 and Rs 21,20,00,000. Two measures across two periods makes four numbers. Anybody reading it wants those values, not the slope between them, so it went into a table and the exhibit disappeared. Cutting a chart at review is an ordinary outcome rather than a sign that something went wrong.

The quarterly exhibit went out because the shape is the whole point and no reader needs Q2 to the rupee. The four quarters were Rs 4,80,00,000, Rs 5,20,00,000, Rs 6,40,00,000 and Rs 4,80,00,000, and they sum to Rs 21,20,00,000. The filed revenue for the year is the same figure to the rupee. A chart whose parts reconcile to a filed total is a chart a reviewer can trust without redrawing it, so the sum is worth printing under the chart.

QuarterPrior yearYear just reported
Q1, April to JuneRs 4,20,00,000Rs 4,80,00,000
Q2, July to SeptemberRs 4,60,00,000Rs 5,20,00,000
Q3, October to DecemberRs 5,20,00,000Rs 6,40,00,000
Q4, January to MarchRs 4,40,00,000Rs 4,80,00,000
Sum of the four quartersRs 18,40,00,000Rs 21,20,00,000
Revenue as filedRs 18,40,00,000Rs 21,20,00,000
DifferenceNilNil

The second surviving exhibit is a line, and it exists because twenty one points is a shape no table can carry. The line plots the operating margin as the share of revenue that does not repeat moves from 0 to 20 per cent. At zero it reads 10.8 per cent. At 14 per cent, the size of the single December order of Rs 2,96,80,000 sitting inside Q3, it reads 5.0 per cent. At 20 per cent it reads 1.9 per cent. The scenario line is a constructed case built to test a boundary rather than a forecast, and its caption says so in those words.

The two surviving exhibits are a pair rather than two separate items, and the pairing is the reason the quarterly chart is in the deliverable at all. The quarterly bars show where the concentration sits, and the scenario line shows what the concentration costs, so the first exhibit is the question the second one answers. Put the second one in front of a reader who has not seen the first and it looks like arithmetic about nothing.

Two exhibits, one pair. The first shows where the concentration sits, the second shows what it costs. EXHIBIT ONE: REVENUE BY QUARTER, DRAWN FROM ZERO. GRIDLINES EVERY Rs 2,00,00,000. 0 Rs 4,80,00,000 Rs 5,20,00,000 Rs 6,40,00,000 Rs 4,80,00,000 THE DECEMBER ORDER, INSIDE Q3 Rs 2,96,80,000 Q1 Q2 Q3 Q4 APR TO JUN JUL TO SEP OCT TO DEC JAN TO MAR The four bars sum to Rs 21,20,00,000, which is the filed revenue for the year to the rupee. EXHIBIT TWO: THE MARGIN AS THE SHARE THAT DOES NOT REPEAT RISES. A CONSTRUCTED CASE, NOT A FORECAST. 0 2 4 6 8 10 12 OPERATING MARGIN, PER CENT THE 11 PER CENT FLOOR, AN INVENTED INTERNAL POLICY AT 14 PER CENT, THE SIZE OF THE ORDER The margin reads 5.0 per cent, which is 6.0 points under the invented floor. At zero on the horizontal scale the margin reads 10.8 per cent, which is already 0.2 points under the floor, and every point after that is lower. 0 5 10 15 20 SHARE OF THE REVENUE OF THE YEAR THAT DOES NOT REPEAT, PER CENT Every figure in both exhibits belongs to an invented assignment. The 11 per cent floor is an invented internal policy, not a rule of Indian lending.
The quarterly exhibit shows Q3 carrying Rs 6,40,00,000 with one order of Rs 2,96,80,000 inside it, and the scenario exhibit shows the margin falling from 10.8 per cent to 5.0 per cent when that order is removed.

How does a lender, an analyst or somebody working alone use any of this?

A lender reading a credit file does not admire the charts, a lender interrogates them. The first move is to find the vertical scale on every exhibit and read where it starts. Thirty seconds of work catches the most common distortion in circulation. The second is to count the categories and ask what is not drawn. A lender who does those two things before reading a single number has already filtered most of what a picture can do to them.

An analyst runs the same rules in the other direction, building rather than reading. The habit worth acquiring is to write the caption first, before drawing anything. When the second line, the one saying what to notice, can be written, the exhibit has a purpose and the chart type usually falls out of the sentence. When that line cannot be written, there is no exhibit yet, only some numbers and an intention, and drawing them will not fix it.

Somebody working alone, with no reviewer, gets more from this than a desk of four does rather than less. There is nobody to say the axis looks odd, so the three tests are the only review available, and they have to be run in earnest rather than hoped for. The household version is exactly the same discipline at a smaller scale. A household comparing quotes for a wedding hall can draw four bars from zero and see the ranking honestly, or can start the scale at the cheapest quote and turn a small difference into a chasm, and the underlying numbers are identical either way. The discipline is not about charts at all, it is about noticing that a picture is an argument and checking the argument before accepting it.

A length is a length and an area is an area wherever the exhibit is drawn, so none of these rules is specific to India or to any one market. The rules for choosing and checking a chart are universal. The conduct duties that govern how work is documented and reviewed are a separate matter, and those do vary by regime.

Five questions are settled above: when a number becomes a chart, the chart each shape calls for, the four ways a chart built from correct numbers still misleads, where the vertical axis starts, and what a caption owes the reader. How the deck those charts sit in is built, and how the spoken explanation around it works, are set out under the finance presentation. Correcting a mistake once the exhibit has already gone out is set out under errors and review; the work here starts one step earlier, at the choice.

References

SourceDocumentWhere
Securities and Exchange Board of IndiaConduct and disclosure duties applying to registered intermediaries, including a duty not to present information in a misleading formsebi.gov.in
Institute of Chartered Accountants of IndiaDocumentation and engagement review standards, including the requirement to document work and to have it reviewed before it is issuedicai.org
International Organization of Securities CommissionsPublished conduct principles that several national regimes draw on, covering cross-border expectations around fair presentationiosco.org
Cole Nussbaumer KnaflicStorytelling with Data, 2015, the origin of chart choice as a taught practiceWiley

The Kavery research desk, Kavery Capital Services Private Limited, Meenakshi Tubes Private Limited, Sharada Iyer, Prakash Nadar and Latha Menon are invented.
Educational material. Not advice on any investment, tax, budget or market position.

Covered in this topic

Subtopics

Data Visualisation vs Data Table
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