Financial analysts often present data to be analyzed pictorially in the form of a graph. One commonly used type of graph is a bar chart. A bar chart represents different values by using rectangular bars. The bars can be placed either horizontally or vertically.
Each category or value to be depicted is represented by its own bar and the length of each bar represents the relative size of the different categories. There is usually a gap between the bars. A bar graph is often used to illustrate the major features of the distribution of data because it is an easy and quick way to see and absorb the information.
Bar charts have a wide variety of uses in financial analysis, one of which is the plotting of share price histories. The analyst will plot time along the X-axis and price along the Y-axis. The bars will be placed vertically, with top of the bar drawn at the highest price the stock reached during the day and the bottom of the bar is at the lowest price.
There are other types of graphs. They are:
• Line graph - A type of graph that highlights trends by drawing connecting lines between data points.
• Pie chart – A type of graph that got its name because it looks like a pie that has been cut into slices to be served. Each “slice” represents a percentage of the whole.
The bar chart and the line graph show comparisons and clarify relationships through time. The pie chart shows a comparison of the parts of a whole for a single, specific time. A line graph is only used to show one comparison, but a bar chart can be used to show multiple comparisons. The bar graph is best for depicting data dealing with the description of components and their frequency distribution.
Disclimer: This website is for informational purposes only and is not intended to provide
specific commercial, financial, investment, accounting, tax, or legal advice.
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