What is a Waterfall Chart?

A waterfall chart is a specific type of bar chart that is utilized to represent the story behind the net change in value between two points. It provides a visual representation by dis-aggregating and illustrating each unique component that contributes to the overall net change. By doing so, it allows the viewer to understand the individual effects that each component has on the final value.

Commonly referred to as Flying Bricks Charts or Bridge Charts, waterfall charts are particularly adept at showing the cumulative effect of sequentially added positive or negative values. Each point on the chart is rigidly connected to the preceding one, clearly demonstrating the incremental changes in value. These points can represent an increase, a decrease, or a subtotal, which makes waterfall charts an ideal single-series tool for visualizing complex financial statements or variations in performance data.

Waterfall Chart Plugins for Excel

The Waterfall Chart Add-in

The Waterfall Chart is an add-in developed specifically for Microsoft Excel to facilitate the creation of waterfall charts on PCs. This plugin is compatible with Microsoft Office 2007 through 2016 and Office 365 for Windows, supporting both 32-bit and 64-bit versions of Excel. The add-in simplifies the setup process, allowing users to generate waterfall charts in just a few steps. It's designed to produce charts that are straightforward to interpret and can handle a variety of chart formats, including those with variances crossing the x-axis. Additionally, the Waterfall Chart add-in offers a 30-day money-back guarantee for users.

Zebra BI for Office

Zebra BI for Office is another plugin that enhances the waterfall chart creation process in Excel. It supports Excel 2016, 2019, 2021, Office 365, and Office for Mac. This plugin streamlines the process, enabling the creation of waterfall charts with just a few clicks and adding advanced features such as automatic setting of totals, breaking the axis, adding relative contributions in percentages, and highlighting differences between totals. Zebra BI for Office also offers customization options like colors and the ability to turn connector lines on or off. Moreover, it ensures that the charts are scaled correctly, automatically includes subtotals, and complies with IBCS reporting standards. Zebra BI for Office is regarded as a superior alternative to Excel's built-in waterfall chart, providing ease of use and enhanced functionality.

Creating Waterfall Charts in Excel

Waterfall charts, also known as bridge charts, are instrumental in visualizing how an initial value is influenced by subsequent positive and negative values, displaying a running total. In Excel, creating a native waterfall chart is accessible by selecting the relevant data and navigating through Insert > Insert Waterfall or Stock chart > Waterfall. There is also an option to use the All Charts tab in Recommended Charts. Excel allows customization of waterfall charts through the Design and Format tabs. Users can define totals or subtotals starting from the horizontal axis and choose to display or hide connector lines for a clearer representation of data flow.

Common Use Cases

• W

  
  Analyzing monthly cash flows in a business to determine the cumulative effect of revenue and expenses over the period
• W

  
  Visualizing project milestone completions and delays to assess overall project progress
• W

  
  Breaking down the components of total profit or loss for a financial period
• W

  
  Tracking inventory levels over time, including shipments, sales, and returns
• W

  
  Assessing the cumulative impact of individual investments on a portfolio’s value over time

Frequently Asked Questions

What is a waterfall chart in Excel used for?

A waterfall chart in Excel is used to show a running total as values are added or subtracted. It helps in understanding the impact of positive and negative values on an initial value, such as net income, and is useful for visualizing changes in data over time, particularly in financial statements and project tracking.

How can I create a waterfall chart in Excel?

To create a waterfall chart in Excel, you need to select your data, then use the appropriate options on the Insert tab, such as the Insert Waterfall or Stock chart function, or select Waterfall under the Recommended Charts on the All Charts tab. Excel 2016 and later versions offer a built-in waterfall chart feature that simplifies creation.

Can I customize a waterfall chart in Excel?

Yes, the appearance of a waterfall chart in Excel can be customized using the Design and Format tabs. Customizations can include setting subtotals to start on the horizontal axis, showing or hiding connector lines, categorizing data points in the legend, and adjusting colors and layouts.

What are the columns in a waterfall chart and how are they color-coded?

The columns in a waterfall chart represent the changes in value, with the first column typically showing the starting value and the last showing the end value. Intermediate columns represent positive or negative changes and appear to float. They are color-coded for easy distinction between positive and negative numbers, often with green for increases and red for decreases.

Are there any plugins for creating advanced waterfall charts in Excel?

Yes, plugins such as Zebra BI for Office allow for the creation of advanced waterfall charts in Excel. This add-in enhances functionality with features like automatic subtotals, perfect scaling, interactive variance highlighting, responsive layouts, and the ability to create small multiples of up to 200 waterfall charts.