Why are there gaps or breaks in the graph?
When viewing CFO Scoreboard's Reports page, you may once in a while see a graph with a "break" or interruption in it. Here's an example of what such a break might look like:
Why do these breaks appear?
CFO Scoreboard will produce these "breaks" whenever a particular data point does not make sense in the real world.
Let's look more closely at the example above, and see how this works.
The break in the graph above is in the "Profit Growth" line. Generally speaking, a month-to-month growth rate like this is calculated by taking the difference between the current period and the previous period, and dividing it over the previous period. The break in this graph happens in March 2014, so the data there would be:
[March profit - February profit] / [February profit] = March profit growth (multiply by 100 to get this in percentage form)
In normal circumstances the logic in this formula works just fine. However in cases where a business makes a rapid change from the red to the black, the concept of profit growth tends to break down. Let's look at a case like that, here:
||Jan 2014||Feb 2014||Mar 2014||Apr 2014|
Let's run the math for March 2014 -- note the subtraction of a negative number in the first parentheses:
[5800 - -25000] / [-25000] = -1.232 (multiply by 100 and the result is -123.2%)
One can compute this value, but that doesn't make it meaningful! As we can see here, between February and March the profit line turns from the red to the black. Clearly if anything is happening, profit is trending in a positive direction. But in this case the technical definition of "Profit Growth" is simply meaningless, and is not useful for providing optics for your business.
Whenever CFO Scoreboard's formulas end up generating a nonsense-like value like this, the data point is simply removed from the graph. In part this is to avoid fouling up long-term averages with values that don't make sense. It is also to ensure that CFO Scoreboard only provides you with the highest quality optics that you can get for your firm.
This "break" in the graph is not a cause for concern, the reason is because what is getting measured is the “long term” (trailing 12 months) of growth rate. This widget is intended for long term optics, not from one month to the next.