Summary

The web content provides a tutorial on using Sankey charts in Python Plotly to visualize business earnings, specifically demonstrating the process with AMD's FY23 Q2 income statement.

Abstract

The article titled "How to Use Sankey Chart to report business earnings via Python Plotly? Part 1" introduces Sankey diagrams as an effective tool for illustrating the flow of money within a company's earnings. It emphasizes the utility of these diagrams in understanding revenue streams and expenditure directions. The tutorial uses Advanced Micro Devices' (AMD) fiscal year 2023 second-quarter income statement as a practical example to guide readers through creating a Sankey chart with Python Plotly. It outlines the necessary steps, from installing the Plotly library to defining the data and constructing the chart, including the creation of labels, values, sources, and targets for the flow. The article concludes by hinting at future discussions on dynamic data reporting and invites readers to support the author by purchasing a coffee.

Opinions

The author believes that Sankey diagrams are particularly useful for tracking and understanding the direction of money flow in a company's earnings.
The article suggests that organizing the labels and values from income statements is crucial for the accurate representation of data in a Sankey chart.
The author implies that the order of labels and the definition of sources and targets are essential for determining the flow and direction within the Sankey diagram.
The tutorial is presented as the first part of a series, indicating the author's intention to delve deeper into dynamic data reporting and live data sourcing in subsequent articles.
The author shows appreciation for support from readers, offering a direct link for those interested in contributing to the author's work.

How to Use Sankey Chart to report business earnings via Python Plotly? Part 1

Sankey diagrams are a type of flow diagram in which the width of the arrows is proportional to the flow rate of the depicted extensive property. It is very useful to track the money flow direction for companies’ earnings and understand the where the revenues go.

In this series of article, we will discuss how to use Sankey Chart to report earning flow from static & manual data, dynamic &live data, to getting revenue segments, etc.

Let’s take AMD’s FY23 Q2 income statement as a demo. The final Sanky Chart will look like this.

First, we need to take a look at its earning to grab some numbers. You can go to Yahoo Finance or AMD’s official website to get the associate income numbers.

Steps of Sankey Chart

Step 0: Install and import plotly

!pip install plotly
import plotly.graph_objects as go

Step 1: Create Labels and values from Income Statements. The order of these labels matters in the next step so I mark the serial numbers for them.

# data
label = ["Data Center", "Client", "Gaming", "Embedded", "Total_Revenue" , "COGS" , "Gross Profit" ,  "Operating loss",  "Operating Expenses" , "RD" , "Amortization",  "SGA" ]
value = [1.3, 1.0, 1.6, 1.5, 2.92, 2.44, 2.44, 0.02, 1.44, 0.48, 0.55]

**Step 2**: This one is crucial part to determine the flow and direction.

Source: This is to define where each arch (line or link) source from. For example, the first arch flows from the first (0) element “Gaming or 0” and the last three arches flow from the ninth (8) element “Operating expenses or 8”, etc.
Target: This is to define where each arch (line or link) flows to. For example, the first arch’s destination is fifth (4) element “Revenue or 4” and the last three arches flow into RD (9), Amortization (10) and SGA(11)

source = [0, 1, 2, 3, 4, 4, 6, 7, 8, 8, 8]
target = [4, 4, 4, 4, 5, 6, 8, 8, 9, 10, 11]

Step 3: Construct and plot the chart.

link = dict(source = source, target = target, value = value)
node = dict(label = label, pad=50, thickness=1)
data = go.Sankey(link = link, node=node)

# plot
fig = go.Figure(data)
fig.show()

We will discuss more on how to report these components dynamically and source the data from the live source instead of using static numbers.

Enjoy it! If you want to support Informula, you can buy us a coffee here :)

𝗕𝘂𝘆 𝗺𝗲 𝗮 𝗰𝗼𝗳𝗳𝗲𝗲

Thank you and more to come :)