Waterfall Chart

Overview

A waterfall chart shows how an initial value is affected by a series of positive and negative changes, resulting in a final value. Each bar "floats" above or below the running total, with connector lines showing the cumulative progression. It's called a waterfall because the bars cascade from the initial value to the final total, resembling a waterfall.

Best used for:

• Financial statements (profit & loss, cash flow)
• Budget variance analysis (planned vs actual)
• Sequential contribution analysis
• Showing cumulative effects of categories
• Breakdown of changes from start to finish
• Impact analysis of multiple factors

Common Use Cases

Financial Analysis

• Profit and loss statements (revenue - costs = profit)
• Cash flow analysis (beginning cash + inflows - outflows = ending cash)
• Budget variance (budget + overruns - savings = actual)
• Revenue waterfall (pricing + volume + mix = total)
• Cost breakdown and reconciliation

Business Performance

• Sales analysis (last year + new sales - churn = current year)
• Employee headcount changes (start + hires - departures = end)
• Inventory changes (beginning + received - sold = ending)
• Customer acquisition and retention
• Pipeline progression

Project & Operations

• Project cost breakdown
• Time allocation analysis
• Resource consumption tracking
• Quality improvement impact
• Process efficiency gains/losses

Options

Category

Required - Column representing each step or component.

Each unique value represents one bar in the waterfall. The order of categories determines the sequence of the waterfall.

Measure

Required - Values for each category.

Column

Select the numerical column containing the values (positive or negative).

Aggregation Function

Choose how to aggregate values:

Options:

• Sum - Total values (most common)
• Mean - Average value
• Count - Number of records
• Median - Middle value
• Min - Minimum value
• Max - Maximum value
• Std - Standard deviation

Measure Type (Optional)

Optional - Column indicating if values are relative or total.

If your data includes intermediate totals or subtotals, use this column to specify which values are:

• relative: Incremental changes (default)
• total: Absolute cumulative values

Settings

Show Connectors

Optional - Display lines connecting bars.

Connector lines show the cumulative flow from one bar to the next, making it easier to follow the progression.

Hide Connectors

Optional - Hide connector lines.

Note: This is the opposite of "Show Connectors" - both settings control the same feature.

Show Total

Optional - Add a total bar at the end.

Automatically adds a final bar showing the cumulative total of all changes.

Use Horizontal Layout

Optional - Display bars horizontally instead of vertically.

Useful when category names are long or when horizontal space is limited.

Hide Empty Values

Optional - Exclude categories with no data.

Understanding Waterfall Components

Floating Bars

• Positive changes: Green bars floating up from previous level
• Negative changes: Red bars floating down from previous level
• Totals/Subtotals: Different color (often blue/gray)

Connector Lines

• Connect the end of one bar to the start of the next
• Show cumulative running total
• Help eye follow the progression

Color Coding

• Green/Blue: Increases (positive contributions)
• Red/Orange: Decreases (negative contributions)
• Gray/Blue: Total or subtotal bars

Tips for Effective Waterfall Charts

1. Order Categories Logically:

   • Start with initial value
   • List changes in meaningful sequence
   • End with final total if using "Show Total"
   • Consider grouping related changes

2. Use Clear Labels:

   • Name categories descriptively
   • Include units in labels or title
   • Use (+) and (-) prefixes if helpful
   • Annotate significant changes

3. Choose Appropriate Aggregation:

   • Sum: For cumulative financial data (most common)
   • Mean: For average impact analysis
   • Count: For quantity changes

4. Handle Totals Properly:

   • Use "Show Total" for automatic final total
   • Use "Measure Type" column for intermediate subtotals
   • Clearly distinguish totals from changes

5. Color Strategy:

   • Keep positive/negative colors consistent
   • Use neutral color for totals
   • Ensure sufficient contrast
   • Consider colorblind accessibility

6. Simplify When Needed:

   • Group small changes into "Other"
   • Limit to 5-10 categories for clarity
   • Use faceting for comparisons across groups
   • Consider separate charts for sub-analyses

Example Scenarios

Profit & Loss Statement

Revenue - COGS - Operating Expenses + Other Income = Net Profit

Cash Flow Analysis

Beginning Cash + Inflows - Outflows = Ending Cash

Sales Variance Analysis

Last Year + New Sales - Churn + Price Changes = This Year

Budget vs Actual

Budget + Overruns - Savings + Adjustments = Actual

Financial Statement Example

Income Statement Waterfall

Revenue: $1,000,000 (starting bar)
- Cost of Goods Sold: -$400,000 (red bar down)
= Gross Profit: $600,000 (total bar)
- Operating Expenses: -$250,000 (red bar down)
- Marketing: -$100,000 (red bar down)
= Operating Income: $250,000 (total bar)
+ Other Income: $25,000 (green bar up)
- Taxes: -$75,000 (red bar down)
= Net Income: $200,000 (final total bar)

Troubleshooting

Issue: Bars don't connect properly

• Solution: Verify categories are in correct order. Waterfall shows cumulative progression, so sequence matters.

Issue: All bars start from zero instead of floating

• Solution: Check that measure values are incremental changes, not cumulative totals (unless using Measure Type column).

Issue: Total bar is wrong

• Solution: Ensure all values are either positive contributions or negative subtractions. Check for data errors or incorrect signs.

Issue: Connector lines are missing

• Solution: Enable "Show Connectors" or disable "Hide Connectors". Check both settings as they control the same feature.

Issue: Colors don't match positive/negative

• Solution: Positive values should show increases (green), negative values decreases (red). Check that your data uses correct signs (+/-).

Issue: Can't see small changes

• Solution: Consider excluding very small values or grouping them into "Other". Use value labels to show exact amounts.

Issue: Too many categories clutter the chart

• Solution: Group minor items, use horizontal layout for better spacing, or create separate charts for different aspects.

Issue: Intermediate subtotals aren't showing correctly

• Solution: Use the "Measure Type" column to mark which rows are "total" vs "relative". Totals should show absolute values, relatives show changes.