This chart is weird but effective

Take a look at this chart. Pretty interesting right?
It’s a chart that shows where Spotify gets its money, and how it spends it. According to the chart, for every $12.68 of revenue, Spotify spends $9.34 on payments to musicians and record labels. Then most of the rest is split between various operating costs like marketing and R&D, with the final 12 cents leftover as operating profit.
This type of chart is called a Sankey Diagram, and they’re great for showing the flow of something, like money or energy.
Here’s another one from the economist. The left hand side shows the total crude oil exports from Russia, then this middle stage shows where that oil goes for refinement, and the final stage is where the refined oil is imported.
Sankey diagrams can be great for a few reasons. First is that they’re intuitive for most people. When I look at this I can pretty easily understand what’s happening. And if I wanted to follow the flow of oil from Russia to India to Australia, it wouldn’t take much effort.
They’re also good for showing relative scale. This one shows Walmart’s revenue breakdown, and you can get a good visual representation of how much profit they make on nearly half a trillion in revenue, in this case about 2%.
But of course Sankey Diagrams should be used with caution. They can get complicated quickly with too many flows, and they don’t do a good job of showing precise comparisons. Plus they can be hard to build without special 3rd party apps or data visualization software like Tableau or Power BI.
But in the right circumstances, and with the right audience, they can be a great way to visualize your data.
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[@chauchau1354]

Great! This is what I had been looking for during the time being accountant and presenting FS to non-accountants. Thanks!

[@atishab05]

Thanks for the video. How does one make a Sankey Diagram?

[@AnalystAcademy]

A commenter on our Instagram post suggested Sankeymatic.

[@ilovetomosomuch]

Microsoft PowerBI can also create it.

[@atishab05]

Thank you.

[@tigertiger777777]

Is there an Excel or PowerPoint plugin to make such a chart?

[@AnalystAcademy]

Yes many of them! Try Power User (add-in), or you can use Tableau.

[@ilovetomosomuch]

Microsoft PowerBI can also create it.