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Analysis with bridges

golden-gate-bridge-388917_1920The technique of bridges is a study tool which is a step beyond the traditional horizontal analysis. It can be said that the latter is static, as it generates a data (sometimes appears as a percentage) but provides no further information. For its part, the analysis with bridges aims not only to display a value, but also explain it. Hence, precisely its name is a bridge between two data.
This is, therefore, an examination with great potential and that requires knowledge or the investigation of the origin of variations or deviations. Not enough to generate a value, but must give the reason or cause.
Let’s take a simple example. Suppose the budget of the Sales Department of a company for the year X and the actual expenditure for that year.
First, we perform the classic analysis.
a horizontal english
The analysis with bridges explains the variations.
a bridges english
As seen in the example, bridges technique gives more information and reconciles data in a simple manner. It pretends to be very visual and schematic, so that we do not need narrative explanations.
The potential of analysis with bridges is high and has the following applications, among others:
It compares different types of settings: allows you to compare the actual data with a budget for the same period; or the actual data with several consecutive periods; or the difference between various budgets …
It analyzes one or more data at once: we can focus on the reasons for a single value such as sales, or make it wider and jointly analyze variations on sales, gross margin and profit. This second option is very rich (and appreciated by managers) and provides at a glance the impact of the mix, volume, price, overhead …
It is applicable to different areas: although its origin is linked to the study of financial indicators can be used to address differences in all kinds of magnitudes: departmental expenses, personnel expenses, number of employees, customer complaints …

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