Communicating Financial Information Through Multidimensional Graphics

This paper examines a multidimensional graphic technique which may be useful for describing the financial status of a firm and can help individuals understand the relationships between financial variables and allow them to identify changes in the trend of firms' financial conditions more quickly than statistical models.

Abstract

The power of graphs to convey relationships and changes in relationships between two variables is well accepted. In fact, it is common for anyone describing a relationship between variables to draw a graph depicting that relationship. Graphs also seem particularly useful in detecting changes in relationships. In the financial area, we see graphs of the Dow-Jones Index, unemployment rates, money supply, and of significant accounting numbers-income, rate of return, sales, etc. These items are graphed to help detect changes in trends not easily identified by standard statistical models. The major drawback of graphs has been the limitation of their use to describing the relationship between two variables. This paper examines a multidimensional graphic technique which may be useful for describing the financial status of a firm. Since it is a graphic technique, it can help individuals understand the relationships between financial variables and allow them to identify changes in the trend of firms' financial conditions more quickly than statistical models.