Financial analysis refers to business assessment in terms of stability, viability, profitability, and other important financial and non-financial factors. It is done through several different techniques, ratios, and charts, with the purpose of transforming static numbers from or in financial statements, to an added value for decision-makers. Usually, the analyzed information and the analysis results are presented frequently as a report or as a dashboard. A dashboard (or data visualization) is used to present all indicators at once to help owners, investors, or managers make efficient decisions by identifying specific actions that should be taken to reach future targets or goals.

1. The Financial Analysis House©
From data to Dashboards!
Dr. Basel Omar Abu-Ali
Copyright © All rights reserved.

2. The big picture
• Financial analysis refers to business assessment in terms of stability, viability, profitability, and other
important financial and non-financial factors.
• It is done through several different techniques, ratios, and charts, with the purpose of transforming static
numbers from or in financial statements, to an added value for decision-makers. Usually, the analyzed
information and the analysis results are presented frequently as a report or as a dashboard.
• A dashboard (or data visualization) is used to present all indicators at once to help owners, investors, or
managers make efficient decisions by identifying specific actions that should be taken to reach future targets or
goals.
• It’s crucial for the analyst or management accountant to know how to transform raw data into compelling
visuals that tell a story. “Over the past three years, the share of analytics spent in finance has increased by half.
Yet 54% of finance organizations still struggle to provide data and reports stakeholders can rely on.” (Gartner,
2024).
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3. The dashboard creation cycle
• The creation of a successful and fruitful
dashboard goes through seven sequential steps.
Starts with data generation, financial preparation,
validation, analysis, selection, interpretation, till
dashboard creation. Figure 1 presents the process
and steps for dashboard creation, which will be
illustrated in more detail.
Dashboard
Data Generation
Financials
Preparation
Validation
Analysis
KPIs & Charts
Selection
Results
Interpretation
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4. Data Generation
• Data or financial information is generated from the system or ERP (enterprise resource planning), which can
vary between advanced systems like SAP, Oracle, etc., lower tier systems, or even by Excel. The essential point
is that this data should be clean, accurate, reliable, and timely. Otherwise, it will be misleading and time-
consuming. Simply said, “garbage-in, garbage out”. In addition, several points need to be considered to ensure a
proper database, for example:
- No human errors are detected.
- All the related entries for the specific period are posted correctly.
- No entries are postponed for the following periods.
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5. Financials Preparation
• The primary data source is an accurate tally trial balance (TB) in which the main two financials, the balance
sheet and profit-and-loss statement, are generated. The cash flow statement is then generated based on both
statements following direct or indirect approaches.
• The income statement and the cash flow statement show every transaction that has occurred over a specific
period, that is, between two balance sheet dates. In contrast, the balance sheet provides a snapshot of the
company's financial situation at a particular time point.
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6. Validation
• The financial statements may cover any period: monthly, quarterly, or for the full year. But the same
importance is validating the numbers and their logic or rationale. For example:
 The financials are prepared according to IFRS or GAAP.
 The financials are linked together with no discrepancies.
 No changes to previously presented months or periods.
 Format consistency from last periods.
 Accruals and related provisions and depreciation are considered.
 Same month or period considered under current, last year, and budget comparison.
At the end, to move to the financial analysis step, financials should be prepared and compared “apple-to-apple.”.
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7. Financial Analysis (1)
Different analysis methods can be applied to extract insights and identify trends. Analysis techniques can be
categorized as follows:
Past Comparative Analysis
Under the comparison analysis, the current month or period may or should be compared to
 Last month or period of the current year.
 Same month or period of last year.
 Same budgeted month or period of the current year.
 Monthly trend analysis for the period of the current year.
 Past three to five years trend.
 Market and industry norms.
 Competitors and benchmarking against the best in the market.
Furthermore, analysts or management accountants should have the required skills to perform a proper analysis,
such as common-sense basics, mathematical abilities, critical thinking, problem-solving, and linking the dots.
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8. Financial Analysis (2)
Common-size analysis
• This can be applied to both the balance sheet and the profit and loss statement. Under the balance sheet, all
accounts will be divided over the total assets. The same is used to find the portion of each account or asset from
the total assets. The accounts will be divided over total revenue in the profit and loss statement. This is
important as it shows how much both direct cost and operating expenses are from revenue. In addition, it shows
how much profitability the business or performance is in terms of gross, EBITDA, and net profit margins.
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9. Financial Analysis (3)
Future Analysis
• This mainly covers the yearend forecast and future projects for valuation purposes. The year-end forecast is a
frequent step done every quarter, especially when the deviation from the approved budget is so high or critical
within the year. Therefore, a revised budget or numbers for the rest of the current year must be forecasted based
on new assumptions.
• As for the business valuation, in summary, this is mainly under capital budgeting done for business valuation
for adding a new business, merger or acquisition, etc. In this case, future discounted cash flows are prepared
based on certain assumptions and indicators outside this article's scope.
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10. Financial Analysis (4)
Ratios Analysis
This is the most common approach to analysis. Different categories of ratios analysis can be performed:
 Profitability ratios
 Activity ratios
 Liquidity ratios
 Solvency ratios or leverage ratios
 Multiples ratios
Financial ratios and other financial results should always be read together to give a better and complete picture
of the financial position and condition of the company.
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11. KPIs and Charts Selection
• Once the analysis is done, it is time to select the best key performance indicators (KPIs) and charts need to be
shared through the dashboard. The best KPIs and charts are the ones that can most support in reflecting the
current situation and final position of the company, as well as the most relevant to decision-making. Besides, the
selection depends on the level and seniority of the audience. The higher the level, the more focused the
dashboard should be. This means KPIs and charts should be selected very carefully. Management dashboards
can include financial indicators, information, and operational and strategic information.
• Different charts can be applied, such as bar charts, pie charts, line charts, etc. However, not all indicators or
charts are relevant for all types of companies and cases. Hence, choosing the right chart is very important to
send the required message correctly.
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12. Results Interpretation
• After the KPIs and charts are chosen, the interpretation of these KPIs and charts is of similar importance. This
mainly starts with an executive summary or business highlight. The interpretation includes clarifications and
justifications for the results. What can be learned from the results of this analysis about the underlying context,
competition, customers, and suppliers? etc.
• As mentioned earlier, assumptions write-ups are similarly critical to provide a better picture and better support
in decision-making. The more added value interpretation means answering the questions of what? why? how?
etc.
• The analyst or management accountant must be aware of the business and its circumstances, enabling him to
choose the best indicators and charts.
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13. Dashboard Creation
• As a result, the dashboard can be designed, which can be system generated, a tool such as Power BI,
PowerPoint slide, or pdf. When it comes to their potential, the majority of management dashboards utilized in
businesses today fall well short. To be more precise, bad visual design rather than technology is the leading
cause of the issue. Dashboards can be customized for particular uses, and one person may benefit from having
several dashboards, each supporting a specific facet of their job.
• The Financial Analysis House© summarizes the seven steps in the next slide.
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14. Accurate and reliable data Generation
Periodic Financials Preparation
Logic, rationality, and numbers Validation
Management Dashboard
Common-size
analysis
Last-period
comparison
Same
period
Last-year
comparison
Actual
vs
Budget
(Variance
analysis)
Financial Analysis
Market ratios
Solvency ratios
Liquidity ratios
Profitability ratios
Activity ratios
5
years/periods
Trend
analysis
YE
Forecast
M&A
Valuation
Competition
analysis
and
Benchmarking
Results Interpretation: clarification, justification, and
assumptions writeup
Market
and
Industry
norms
comparison
Monthly/period
Trend
comparison
KPIs and charts Selection
The Financial Analysis House©. Copyright Dr. Basel Omar Abu-Ali
Decision
Making
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15. Conclusion
• Analyzing data and creating a worthwhile dashboard for decision-makers is a skill, an art, and a science at the
same time. Although all financial information should be reliable for all companies, not all financial analysis is
relied upon for all types of companies. Besides, as not all indicators fit all companies in all industries, selected
indicators can add value to management dashboards. A well-designed dashboard yields better results than
decorative gauges, meters, and traffic lights combined. Above all, communication is key.
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