Data analytics

Data analytics for accounting is a skill in which professionals capture, harvest, and analyze data
pertaining to a company’s finances. Professionals then use that data to inform decision-making
and strategic planning processes in order to make more accurate projections
Data analytics is the process of collecting and examining data, in order to extract meaningful
business insights, which can be used to inform decision-making to improve performance. This
can be done through a variety of methods, such as statistical analysis (eg regression analysis) and
machine learning1 and organisations are likely to use data analytics software (such as Tableau;
Microsoft Power BI; or Qlik Sense) to facilitate their analysis. Although the detailed analysis and
modelling of data takes place in the software, accountants need to be able to interpret the
information provided by the software; for example, assessing whether patterns or trends
identified by the software seem realistic or plausible
four types of data analytics in accounting.
Descriptive Analytics
What took place this quarter? How are we performing compared to our performance last year?
These are the types of questions that can be answered with this type of analytics.
Descriptive data analytics in accounting involves data that alerts a team to the current status of an
operation. It provides basic insight into what is currently happening.
An accountant who specializes in descriptive data analysis can use relevant data to create precise
financial statements, reports, and recommendations for a business in the present moment.
Diagnostic Analytics
Why did this strategy fail? Why did we perform better than expected this quarter? Diagnostic
data analytics in accounting aim to answer these more complex questions. They can provide
insight into why the descriptive analytics numbers appear the way they do.
Accountants who specialize in diagnostic data analysis employ both recent and past data to gain
a better understanding of the outcomes demonstrated by descriptive data. These answers can be
used to communicate to the C-Suite of a company, to provide insight to board members and
investors, and to analyze business performance.
Predictive Analytics
Can data really predict the future? The plain answer is no, but it’s more complicated than that.
Projections, strategy, and predictions begin with predictive data analytics. Accountants who
specialize in predictive analytics use diagnostic and descriptive data to forecast future trends,
outcomes, and patterns.
Depending on the amount of data that’s actually available for analysis, predictive analytics could
either be used to inform minor decisions and strategies, predict major trends, or demonstrate the
potential result of a proposed decision.
The results aren’t set in stone—predicting future outcomes with 100 percent accuracy is
impossible. But accountants can use this type of analysis to get a better understanding of what
might happen in a business’s future.
Prescriptive Analytics
The final type of analysis works in tandem with predictive analytics to determine what should
happen in order to help a business reach its objectives. They can be used to inform
recommendations, strategies, and actions that can result in major wins for a company.

The crisps (cross industry standard process for data mining)

Four Vs of Big Data

Big data helps financial institutions address heightened competition and regulation while
meeting the rising expectations of their clients by taking advantage of the four V’s of big data:
Volume
refers to the increasing size of the datasets that the financial industry must process and analyze,
which now measure in the petabytes (one petabyte equals 1 million gigabytes).
Variety
relates to the many different data sources that big data applications tap to create analyses that
more accurately represent a business’s financial operations today and in the future.
Velocity
refers to the high speed at which data is created, which requires distributed processing
techniques to collect and curate information in many different formats and contexts.
Veracity
describes the quality of the data being analyzed, especially whether the data is consistent and
certain. It also relates to the data’s ready availability and controllability.
The four Vs are sometimes referred to as the five V’s when value is added. Value in this context
means that the data contributes in a meaningful way to the analysis rather than being extraneous

Data generation
The first step to managing your data lifecycle successfully is data generation. In the life sciences
industry, data generation is an ongoing process resulting from R&D, compliance, and
manufacturing records. Some of the important activities that lead to the generation of the data
are:
 Raw material specifications
 Raw material inventory
 R&D experiments and manufacturing batch records
 In-process and finished product test results for R&D experiments
 Compliance data of R&D activities
 Batch release data
 Marketing and sales data
 Finance data
Data collection
The data generation activities in the first stage of data lifecycle management lead directly to data
collection. This may sound simple, but collecting large chunks of data accurately is quite the
challenge! This is where software-driven automation can come into play. A systematically
planned data policy may help you manage this step effortlessly
Data storage
Now that your data is available in an accessible and usable form, the next step in the data
lifecycle management is to ensure that it is stored safely for future use. Depending on your
organization's IT policies, you can store your data using off-site cloud services such as historian
platform, or on-site options like SSDs, hard disk drives, magnetic LTO tape, or even DVDs. One
very important factor for on-site storage methods is to consider their conservatively expected
lifespan
Data processing
Once data has been collected and digitalized with the help of your preferred software services, it
must be processed. A good data lake house can help you achieve this step. Data processing may
include – but is not limited to – the following activities:
 Data wrangling
in which data from various software sources is combined in a meaningful way to clean and
transform data from raw form into a more accessible and usable format.
 Data compression
is an essential processing step in which data is transformed to be more efficiently stored.
 Data encryption
is another data processing step in which data is translated into another form of code to protect it
due to privacy concerns.
 Data processing
may also include the simple act of converting printed data into digital data.

Management
Just storing data is not enough! That’s why this next step in the data lifecycle is to manage all
stored data. Backing up your data is one important step to protect data from unintentional
damage or loss. Your data backup strategy should address the following questions:
  Who will be responsible for managing data backups?
 Will it be an automated process?
 How frequently will the backup take place?
 How many copies of the backup will be created?
 Where will the backup be stored?
 Who will have access to the backup?
Another important aspect of data management is defining user access levels. This may include
particular info about data viewing, editing, analyzing, and deleting rights of users based on their
authority level.

Analysis
This step is truly the core of the data lifecycle. Here, data analysts perform various tests on the
data to derive meaningful insights. Your analysts may perform several graphing options on the
data, followed by data modeling using machine learning, artificial intelligence, statistical
methods, or mathematical methods. The data analysts will also select the most appropriate data
analysis technique based on the problem statement they are trying to solve. This may include
performing model validation tests to finalize the model for future predictions based on your data.
Visualization & Interpretation
Once you have successfully validated the model in step 6, you can move on to Data
Visualization. The purpose of this step is to represent the information contained in the data in a
palpable format. Your data analyst may create various data visualization dashboards to help users
visualize the data. For example, one data visualization dashboard can highlight manufacturing
process differences in the out-of-specification batch vs. the successfully released batch.
Users derive meaningful insights from the charts and predictions displayed on data visualization
dashboards. This data interpretation is used for important business decisions and process
improvements.
Destruction
It is crucial that data destruction (also known as data purging) also removes every obsolete copy
of an item. This is typically done in an archive storage location. The challenge of this phase of
the lifecycle is to ensure that all data has been properly destroyed. But even before destroying
data, it is important to ensure that the targeted items have exceeded their regulatory minimum
retention period.
Tools For Data Analytics
Data Visualization In Excel
WHAT IS DATA VISUALIZATION?

Data visualization is the process of creating a visual representation of the information within a
dataset.

While there are hundreds of ways to visualize data, some of the most common data visualization
techniques include:

 Pie charts
 Bar charts
 Histograms
 Gantt charts
 Heat maps
 Box-and-whisker plots
 Waterfall charts
 Area charts
 Scatter plots
 Infographics
 Maps


WHY IS DATA VISUALIZATION IMPORTANT

Visually depicting data often makes it easier to understand and draw insights from. As such, data
visualization is an effective means of making data more accessible across an organization. This,
in turn, can empower employees to back their actions using concrete information instead of
relying on assumptions—resulting in more data-driven organizational processes.

Data visualization can also play an important role in communication with parties outside of a
business, such as the media, investors, regulatory agents, and other stakeholders.

Data visualization has become so important to modern business that many organizations are now
specifically hiring individuals proficient in it, among other data science skills.
WHAT ARE DATA VISUALIZATION TOOLS?

A data visualization tool is a form of software that’s designed to visualize data. Each tool's
capabilities vary but, at their most basic, they allow you to input a dataset and visually
manipulate it. Most, but not all, come with built-in templates you can use to generate basic
visualizations.

DATA VISUALIZATION TOOLS FOR BUSINESS

1. Microsoft Excel (and Power BI)

In the strictest sense, Microsoft Excel is a spreadsheet software, not a data visualization tool.
Even so, it has useful data visualization capabilities. Given that Microsoft products are widely
used at the enterprise level, you may already have access to it.

According to Microsoft’s documentation, you can use Excel to design at least 20 types of
charts using data in spreadsheets. These include common options, such as bar charts, pie charts,
and scatter plots, to more advanced ones like radar charts, histograms, and tree maps.

There are limitations to what you can create in Excel. If your organization is looking for a more
powerful data visualization tool but wants to stay within the Microsoft ecosystem, Power BI is an
excellent alternative. Built specifically as a data analytics and visualization tool, Power BI can
import data from various sources and output visualizations in a range of formats.

2. Google Charts

For professionals interested in creating interactive data visualizations destined to live on the
internet, Google Charts is a popular free option.

The tool can pull data from various sources—including Salesforce, SQL databases, and Google
Sheets—and uses HTML5/SVG technology to generate charts, which makes them incredibly
accessible. It offers 18 types of charts, including bar charts, pie charts, histograms, geo charts,
and area charts.

Members of the Google community occasionally generate new charts and share them with other
users, which are arranged in a gallery on Google's website. These charts tend to be more
advanced but may not be HTML5-compliant.
3. Tableau

Tableau is one of the most popular data visualization tools on the market for two main reasons:
It’s relatively easy to use and incredibly powerful. The software can integrate with hundreds of
sources to import data and output dozens of visualization types—from charts to maps and more.
Owned by Salesforce, Tableau boasts millions of users and community members, and it’s widely
used at the enterprise level.

Tableau offers several products, including desktop, server, and web-hosted versions of its
analytics platform, along with customer relationship management (CRM) software.

A free option, called Tableau Public, is also available. It’s important to note, however, that any
visualizations created on the free version are available for anyone to see. This makes it a good
option to learn the software's basics, but it’s not ideal for any proprietary or sensitive data.

4. Zoho Analytics

Zoho Analytics is a data visualization tool specifically designed for professionals looking to
visualize business intelligence. As such, it’s most commonly used to visualize information
related to sales, marketing, profit, revenues, costs, and pipelines with user-friendly dashboards.
More than 500,000 businesses and two million users currently leverage the software.

Zoho Analytics has several paid options, depending on your needs. There’s also a free version
that allows you to build a limited number of reports, which can be helpful if you’re testing the
waters to determine which tool is best for your business.

There are many other tools that work similarly to Zoho Analytics and are tailored to sales and
marketing professionals. HubSpot and Databox are two examples, both of which include
powerful data visualization capabilities.

5. Datawrapper

Datawrapper is a tool that, like Google Charts, is used to generate charts, maps, and other
graphics for use online. The tool’s original intended audience was reporters working on news
stories, but any professional responsible for managing a website can find value in it.

While Datawrapper is easy to use, it’s somewhat limited, especially compared to others on this
list. One of the primary limitations is that it doesn’t integrate with data sources. Instead, you
must manually copy and paste data into the tool, which can be time-consuming and liable to
error if you aren’t careful.

Some common outputs include scatterplots, line charts, stacked bar charts, pie charts, range
plots, and a variety of maps and tables. Free and paid options are available, depending on how
you intend to use the tool.

6. Infogram

Infogram is another popular option that can be used to generate charts, reports, and maps.

What sets Infogram apart from the other tools on this list is that you can use it to create
infographics (where its name comes from), making it especially popular among creative
professionals. Additionally, the tool includes a drag-and-drop editor, which can be helpful for
beginners.

Visualizations can be saved as image files and GIFs to be embedded in reports and documents,
or in HTML to be used online. Like most of the other tools on this list, Infogram has tiered
pricing, ranging from a free to enterprise-level version.

Financial Statement
Income statement
Statement of financial position
Cashflow statement
Ratios
Common size
Vertical analysis
Is a kind of financial statement analysis wherein each item in the financial statement is shown in
the percentage of base figure:

- All items in the income statement are stated as a percentage of gross sales
 - All the items in the balance sheet as stated as a percentage of the total assets

Trends
Cross sectional analysis
Graphs and charts
Forecast financial statement
Data visualization
Dashboard