How To Create a Waterfall Chart

Mastering the skill of creating compelling and meaningful waterfall charts is an asset in any data-driven field. - Article authored by Kunal Chowdhury on .

Waterfall charts, also known as bridge charts, are a distinctive type of data visualization used to showcase how an initial value is affected by a series of intermediate positive or negative values. Essentially, they provide a detailed breakdown of cumulative impact, making them ideal for financial analysis, inventory changes, or explaining the transition between two points.


Accurate comprehension and application of this tool can revolutionize how you analyze data and communicate it with others. Below, we will delve into the process, so keep reading.


A collection of rainbow bars aligned in a cascading waterfall pattern on a black background


Understanding the Purpose of a Waterfall Chart

A waterfall chart serves as a visual representation of sequential impacts on an initial quantity that results in a final quantity. It allows individuals to see the cumulative effect of sequential transactions, thus giving a comprehensive understanding of the dynamics at play.


For instance, a company's net income is the final amount after various incremental or decremental activities such as revenues, costs, taxes, etc. A waterfall chart enables one to visualize this cumulative process.



Moreover, waterfall charts can be helpful in various sectors for different purposes. Their usage isn't limited to financial analysis but extends widely across different segments like inventory management, population studies, project management, and much more.


Such versatility points out that understanding how to create a waterfall chart is a valuable skill in today's data-centered world.



Step-by-Step Guide to Creating a Waterfall Chart in Excel

Creating a waterfall chart in Excel is fairly simple. Firstly, you need to input and select the data you want to chart. A typical data setup for this chart type includes one data column (categories) and two numerical columns (initial and subsequent values).


Once your data is ready, navigate to the 'Insert' tab on the ribbon and select 'Waterfall' under the 'Charts' group. Excel will automatically create the chart with your data, placing your categories along the x-axis and numerical values along the y-axis.



After inserting the chart, you may notice your data isn't accurately represented, i.e., everything appears above the x-axis. To resolve this issue, you need to adjust the data series and set the start and end values accurately. Select the data that should be subtractive or negative and change its format in the chart options.


The final steps involve customizing your chart to improve readability, such as adjusting colors to differentiate between positive and negative values, adding a title and data labels, and resizing the chart as needed.



Making A Waterfall Chart in PowerPoint

A man creating a waterfall chart on a desktop


Just as with Excel, waterfall charts can also be created in PowerPoint. This ability is particularly useful when presenting the progress of a metric over time in a company's annual presentation or a project status report.


To create a waterfall chart in PowerPoint, go to the 'Insert' tab on the ribbon, then 'Chart', and choose 'Waterfall'. You will notice that PowerPoint will insert a sample chart, and an associated Excel worksheet will open on the side.


In this worksheet, replace the sample data with your own. As you modify the data in Excel, you'll see your PowerPoint chart automatically updating. This synchronization between Excel and PowerPoint not only makes the task easier but also ensures data consistency across your documents.



Once your data is fully set, you can close the Excel worksheet, and focus on customizing the appearance of your chart in PowerPoint. The 'Format' tab under 'Chart Tools' will provide you with a wealth of styling options.


Altogether, mastering the skill of creating compelling and meaningful waterfall charts is an asset in any data-driven field. They not only hold the power to simplify complex data but also present it in such a way that even the layman can understand.


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