In FY 2018, Microsoft’s revenue exceeded $100B for the first time. Net income reached $17B, which was a 35% increase over 2017. Microsoft's FY 2018 income statement is summarized in the cascade (waterfall chart) below. Revenue and cost of revenue are split between product and services. Products accounted for 58% or revenue and only 40% of the related cost, making them significantly more profitable for Microsoft. Taxes, sales and marketing and R&D were the largest expense categories. When compared to the previous year, revenue was up 14% and most costs were up slightly less, leading to profits that were up 35%.
Cascade/Waterfall Chart with Data Rows (Table)
How I Created the Cascade Chart
I wanted to create a better visual representation of Microsoft's income statement than the table the company provided in its earnings material. The cascade shows the relative size of each cost category when compared to total revenue and profit. The reader can move from left to right and see how the different types of expenses reduce revenue and lead to Microsoft's net income. The stacked cascade splits revenue and cost of revenue into two categories--product and services. The reader can see the impact of each on both revenue and cost of revenue by including the percentages in the segments. The data rows (table) provides for comparison to previous year and shows the relative size of each expense category and income subtotal.
Here are the steps I took to create the chart:
- copied the data from the Excel workbook provided by Microsoft as part of their Q4 2018 reporting into a the Mekko Graphics Data Editor
- used the Switch/Bars series button to treat rows as bars and columns as series as the data are provided by Microsoft is not in the format Mekko Graphics expects for a cascade chart
- added columns (series) to the Data Editor spreadsheet for Products, Services and Other, 2018 total, % or Revenue and YoY growth
- added formulas to compute the numbers needed for the new columns
- used Format Bars/Series to specify the rows columns to be included in the chart and those used for data rows
- formatted the data rows to show as percentages
- data scaled the numbers to show in billions as they were input in millions, using the Data Scale option in Format Chart
- formatted the bar totals to show as $B and to show the negative numbers without a minus sign in front of them (in Format Chart)
- added a legend, showed only the two items and positioned the legend next to cost of revenue
- adjusted the y axis maximum and bar gaps and hid the x and y axis
- adjusted internal chart margins and fonts
- set colors.
Take This Chart and Make It Your Own
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