A Sankey diagram of cash flow, not just profit.

The statement we start from

One quarter, indirect method, in thousands. The company made 210 of profit and cash rose 180 — the picture below shows where the other 30 plus the equipment money went.

The seven steps

1. 1

   Start from the statement, not the P&L

   The income statement says the company made money. The statement of cash flows says where the money actually went, and the two disagree often enough that investors read both. If you have only drawn your P&L so far, the method is the same one — see how to turn an income statement into a Sankey diagram first, then come back for this one.

   Everything you need is on the statement your accountant already produces. Nothing gets re-derived for the picture.

2. 2

   Keep the three sections visible, not exploded

   Operating, investing, financing — the three sections of the statement each need a name in the picture. Operating becomes a middle node, because it is where the bridge from profit happens; investing and financing become the ribbons that leave or join the cash change node, named for the line item: equipment purchases, loan drawdown, debt repaid.

   Three middle columns stay readable; five rarely do. Resist sorting the payments alphabetically inside a section, because the reader is checking the statement against the picture and the statement has an order.

   The statement, as flow lines

   • Net income [$210k] Operating cash
   • Depreciation [$85k] Operating cash
   • Stock-based comp [$60k] Operating cash
   • Payables stretched [$45k] Operating cash
   • Operating cash [$140k] Receivables grew
   • Operating cash [$260k] Cash change
   • Loan drawdown [$100k] Cash change
   • Cash change [$120k] Equipment purchases
   • Cash change [$60k] Debt repaid
   • Opening cash [$320k] Closing cash
   • Cash change [$180k] Closing cash
3. 3

   Turn the add-backs into flows

   The indirect method starts with net income and adds back things that never touched cash: depreciation, stock-based compensation. In the diagram each add-back is simply a source flowing into operating cash, which is exactly what it is — a correction that arrives without a payment.

   Net income, depreciation and stock comp flow in; nothing else needs explaining. The picture shows the profit turning into operating cash in one glance.

4. 4

   Let the working-capital changes speak

   Receivables grew by 140 — that is profit invoiced but not collected, and it is the single most useful number on the statement. In the diagram it leaves operating cash as a flow to its own node, named receivables grew, the same thickness as any payment.

   A P&L Sankey cannot show this at all. It is the reason a cash flow Sankey is worth a separate picture from the profit one.

5. 5

   Close with opening and closing cash

   Opening cash is a source, cash change is a middle node, and closing cash is the destination the cash change node feeds. The two cash nodes make the diagram balance, and they answer the question a reader asks first: did the cash go up.

   In the example the company made 210 of profit and cash rose only 180, because receivables swallowed part of it and equipment ate more. That gap is the story, and the picture tells it without a footnote.

6. 6

   Style it, then export at the size where it is going

   Theme, ribbon curve, label position and export size are controls beside the canvas, and each redraws the diagram as you move it. Deck size, 1600 by 900, suits a finance pack; square suits an image post.

   A watermarked PNG download is free, with no account. Clean PNG and SVG come with a Pass.

7. 7

   Next quarter, paste and re-run

   The line names you just chose are the part worth keeping: they are the statement's own vocabulary. Save the diagram, and next quarter replace the amounts in the same lines.

   Node order, theme and export size stay exactly where they were, so the quarters compare honestly. The quarter you replaced is kept as a dated snapshot.

What those lines draw

Nothing was retyped for this picture. It is the 11 lines above, drawn at deck size, which suits a finance pack.

This page draws the cash bridge from profit. For the direct method — receipts in, payments out — see the cash flow Sankey template; for the profit picture itself, how to turn an income statement into a Sankey diagram.

Where it goes wrong

• Drawing the P&L and calling it cash

  Revenue in, costs out, profit at the end is an income statement, and it hides the receivables problem entirely. A cash flow analysis needs the statement of cash flows as its source.

• Mixing the two methods

  The direct method lists receipts and payments; the indirect method bridges from net income. Either draws well, but half of each is a diagram that balances by accident. Pick the one your statement uses.

• Forgetting opening cash

  Without an opening cash source, closing cash floats unexplained. The pair of nodes is what turns a list of movements into a picture that answers did the cash go up.

• Splitting a section into five nodes

  Operating cash feeding payroll, rent, taxes, marketing and equipment as five separate ribbons turns the statement into spaghetti. Keep the three sections whole; the line items live in the table underneath.

When a Sankey is the wrong chart

A Sankey shows structure: what came in, where it went, in one period. Two common questions it answers badly.

• Forecast scenarios

  A forecast asks what if, which is a chart with axes and several lines, not one picture of what happened. Draw the actual quarter as a Sankey; keep the scenarios in a line chart where the reader can see the spread.

• A single number's trend

  If the question is how has cash moved over twelve months, that is one series over time, and a line chart answers it in half a second. A Sankey is for structure, not for trend.

Questions

How do I make a Sankey diagram of my cash flow?

Take the statement of cash flows, make operating, investing and financing the three middle nodes, one flow line per line item, then add opening cash as a source and closing cash as the destination. Paste the lines into the studio.

What can it show that a P&L Sankey cannot?

Where profit went. The income statement stops at net income; the cash flow statement shows the receivables that were never collected and the equipment that was bought, which is usually the real story of the quarter.

Which method should I use, direct or indirect?

Whichever your statement uses. The indirect bridge from net income draws as add-backs flowing into operating cash; the direct method draws as receipts in and payments out, which is what the cash flow template opens with.

Can it show a quarter where cash went down?

Yes. The closing cash node is simply thinner than opening cash, and the widest ribbon leaving shows which section drained it. Ribbons carry the amounts, so the shrinkage does the talking.

Do the add-backs belong in the diagram?

Depreciation and stock-based comp are the bridge from profit to cash, so yes — they are what makes the picture explain the gap between the two statements. Leave them out and the operating node looks like a trick.

What does it cost?

Building, styling and a watermarked PNG are free, with no account. A Pass is $12 for a week, $39 for a quarter or $99 for a year, paid once, and buys saving, re-running and clean PNG or SVG export.

Other starting points

• Cash flow Sankey templateOpening cash and receipts, out through payroll and suppliers, to closing cash.
• Income statement to SankeyThe profit picture: revenue split into costs and operating income.
• Monthly P&L Sankey templateRevenue split into gross profit, costs and operating profit.

Passes are paid once: $12 for a week, $39 for a quarter, $99 for a year. A Pass buys saving, re-running, saved themes and clean PNG or SVG export.