How to Make a Waterfall Chart

A waterfall chart is one of the most effective ways to show how a starting value increases or decreases through a series of sequential changes. This article walks you through what a waterfall chart is, when to use one, and how to build one step-by-step in both Microsoft Excel and Google Sheets.

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What is a Waterfall Chart?

A waterfall chart, sometimes called a bridge chart, gets its name from its appearance - a series of "floating" bars that looks like a cascade. The chart shows a running total as values are added or subtracted over time or across categories. It’s an ideal way to visualize the journey from a starting number to a final one.

Here’s how it typically works:

• The first column is a full bar representing the starting value (e.g., initial revenue, beginning headcount, starting budget).
• The intermediate columns are floating blocks that represent positive or negative changes. Positive values (gains) float up from the endpoint of the previous bar, while negative values (losses) float down.
• The final column is another full bar representing the end value, showing the cumulative result of all changes.

This structure makes it exceptionally clear how individual positive and negative factors contribute to the final tally, telling a story that a standard bar chart can't.

When Should You Use a Waterfall Chart?

Waterfall charts are perfect for telling a story of change. They answer the question, "What happened between point A and point B?" Use them whenever you need to break down the positive and negative components that contribute to a net change in a value.

Common use cases include:

• Financial Statements: Easily illustrate a Profit and Loss (P&L) statement. Start with revenue, then subtract the cost of goods sold, operating expenses, and taxes to arrive at net income.
• Budget vs. Actuals: Show how a starting budget changed throughout a quarter due to various expenses and revenue adjustments to arrive at the final amount.
• Inventory Analysis: Track inventory levels by showing starting inventory, adding new stock, subtracting sold items, and returns, to get to the ending inventory number.
• Sales and Marketing Funnel: Visualize customer journey numbers, starting with total website visitors, then subtracting bounces, adding leads, and so on, to arrive at the final number of closed-won deals.
• Project Management: Monitor changes to project timelines or resource allocation over the lifecycle of the project.

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How to Make a Waterfall Chart in Excel

Newer versions of Excel (2016 and later) have a built-in Waterfall chart type, which simplifies the process immensely. Older versions required a clever workaround with a stacked column chart, but for this guide, we'll focus on the modern, straightforward method.

Let's use a simple example: tracking a company's monthly change in cash balance.

Our data looks like this:

• Starting Cash: $50,000
• Sales Revenue: +$25,000
• Client Refunds: -$3,000
• Payroll Expense: -$12,000
• Rent: -$5,000
• Ending Cash: (Calculated total)

Step 1: Set Up Your Data in Excel

Organize your data in two columns. The first column describes the category, and the second column shows the value of the change. Make sure positive numbers represent increases and negative numbers represent decreases.

You'll also need calculated rows for your starting and ending totals.

1. Create two columns: Category and Amount.
2. List your starting value first (e.g., "Starting Cash," an input value).
3. List all the intermediate positive and negative changes.
4. For the final row (e.g., "Ending Cash"), create a simple SUM formula. In our example, =SUM(B2:B6). Excel's waterfall chart will calculate this automatically, but it's good practice to have it in your data table too.

Your table should look like this:

Step 2: Insert the Waterfall Chart

Now that your data is ready, creating the chart takes just a few clicks.

1. Select your data range, including the headers and the calculated total (in our case, A1:B7).
2. Go to the Insert tab in the Excel ribbon.
3. In the Charts group, click the Waterfall, Funnel, Stock, Surface, or Radar chart dropdown icon.
4. Select Waterfall.

Excel will instantly generate a chart. By default, it automatically colors increases (blue), decreases (orange), and totals (gray), but it doesn't know yet that your "Starting Cash" and "Ending Cash" bars are totals. They will appear as floating bars for now.

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Step 3: Define Your Totals

To make the chart function correctly, you need to tell Excel which bars are the anchor points (start and end totals). These bars should be grounded at zero, not floating.

1. Right-click on the first bar ("Starting Cash"). From the context menu, select Set as Total.
2. The bar will immediately drop to the baseline and change color.
3. Now, do the same for the last bar. Right-click on the "Ending Cash" bar and select Set as Total.

When you set a value as a total, Excel understands it's a cumulative sum, not just another sequential change.

Step 4: Customize and Format Your Chart

Your chart is now functionally complete! The last step is to clean it up for better readability.

• Change Colors: Double-click any series bar to open the Format Data Point pane. Here you can change the fill colors for Increase, Decrease, and Total bars. A common practice is green for increases, red for decreases, and gray or blue for totals.
• Add Data Labels: Click the "+" icon next to the chart and check the box for Data Labels. This adds the values to each bar, making it easier to read.
• Add a Chart Title: Give your chart a clear, descriptive title like "Monthly Cash Flow Breakdown."
• Remove the Legend: Since the colors are intuitive (especially if you choose green/red), the legend is often redundant. Click on it and press Delete.

How to Make a Waterfall Chart in Google Sheets

Google Sheets also has a dedicated waterfall chart type, making the process just as easy as it is in Excel.

Let's use the same monthly cash flow example.

Step 1: Set Up Your Data in Google Sheets

The data preparation is nearly identical to Excel. Just create two columns for your categories and amounts. Unlike Excel's automatic calculation, in Google Sheets, you must explicitly create the "end" total.

1. Create your Category and Amount columns.
2. List the starting value and all intermediate changes.
3. For the final row, label it something like "Ending Cash (Subtotal)" and use a SUM formula to calculate the result. This naming hint helps remind you that it needs special handling in the chart settings.

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Step 2: Insert the Waterfall Chart

1. Select your entire data range (e.g., A1:B7).
2. Go to the nav menu and click Insert > Chart.
3. Google Sheets often defaults to a column or bar chart. In the Chart editor pane that appears on the right, navigate to the Setup tab and click the Chart type dropdown.
4. Scroll down to the "Other" section and select Waterfall chart.

Step 3: Define Subtotals

Just like in Excel, you need to designate your start and end points as totals.

1. In the Chart editor, switch from the "Setup" tab to the Customize tab.
2. Expand the Series section.
3. You'll see a section for "Subtotals". Click Add new item.
4. In the "Subtotal type" dropdown, choose Replace. For the "Column index," enter the row number of your ending total.
5. Optionally, you can give your subtotal a custom label here. Check the box for "Set as last subtotal column" to ensure it's calculated from all preceding values.

Step 4: Customize the Look

The Customize tab is where you clean up the chart:

• Under Series, you can set the fill colors for Positive, Negative, and Subtotal bars.
• In the Connectors section, you can add connecting lines between the bars if you find them helpful.
• Under Chart & axis titles, add a descriptive title.
• Expand the Series section again and check the box for Data labels to display the values.

Final Thoughts

Waterfall charts are an incredibly powerful tool for showing the story behind a number. By visualizing sequential positive and negative changes, you can provide a clear and intuitive breakdown of financial results, inventory levels, or any other value that changes over time. With the built-in chart types in both Excel and Google Sheets, building one is now faster than ever.

While spreadsheets are great, the process still involves setting up tables, writing formulas, and manually configuring chart settings. At Graphed, we’ve made this even easier. You can connect your data sources directly and just ask for what you want in plain English. Prompting "Create a waterfall chart showing cash flow from last month" generates a live-updating, professional chart in seconds, letting you skip the manual spreadsheet work and get straight to the insights.