Improving the communication of accounting information through cartoon graphics

Abstract

There has been limited study to date of the effectiveness of alternative methods of presenting accounting information for financial decision purposes. Explores the relative usefulness of the schematic face, compared with conventional presentation formats, for communicating the multivariate information set conveyed in a set of financial statements. Compares the ability of accounting statement users of different levels of sophistication to “predict” bankruptcy and financial health of companies on the basis of cartoon faces, accounting statements and financial ratios. Presents evidence that the schematic representations are processed more quickly than either of the more traditional methods of information presentation, and with no loss of accuracy, by all three different types of user examined. Concludes by arguing the potential generalizability of the cartoon graphic approach to more complex financial decision applications, such as those in banking and financial analysis.