Waterfall charts

A waterfall chart is used to visualize how the starting value of something (say a bank account) gets to the end value (balance at the end of the month). This is achieved by a series of adding or subtracting values such as payments out and payments in.

They work by showing a starting value and then add or subtracts values on a cumulative basis. This makes a waterfall chart a great chart to use in Finance.

The additions and subtractions can either be time-based or category-based. Examples of time-based would be values in and out by month. Examples for category-based include various sources of revenues and various sources of expenses for a given time period.

Totals and major Sub-Totals are represented by full columns. While sub-components of the incoming and outgoing streams are represented by color-coded floating blocks.

Look at the following. You might get a better view using the attached PDF.

This shows a very creative use of a waterfall chart used to replace the standard Income statement. Income and positive values are shown in blue. Yellows are negative values or costs. And the grey columns are the totals and subtotal.

There is also a comparison column showing changes from 2017 to 2018. Green showing any gains on the previous year, red showing increases in costs and again grey showing the totals.

In Excel, you can create a waterfall chart like the one above, but you can not create it using Excel’s built-in waterfall charts. Unfortunately, Excel’s built-in waterfall chart has many limitations and in the next video, we will look at this in more detail.