How to Create a Waterfall Chart in Excel

Waterfall charts are a powerful visualization tool used to illustrate the cumulative effect of sequential data points, such as profits, losses, or changes over time. Widely used in financial and performance analysis, these charts provide clear insights into the contributions of individual components to a total value. Whether you’re presenting a business report or analyzing operational results, a waterfall chart in Excel can make your data more comprehensible. This guide will cover how to create a waterfall chart in Excel, along with waterfall chart customization in Excel for tailoring visuals to your specific needs.

Disclaimer: Always ensure the accuracy of your data and double-check calculations to avoid misrepresentations in analysis.

How to Create a Waterfall Chart in Excel

Creating a Waterfall chart in Excel is simple and helps you visualize changes in values over time or categories. Follow these steps to create a waterfall diagram in Excel:

Note: Keep in mind that creating waterfall charts is easy in Excel 2016 and newer versions because they have a built-in option for it. In older versions, it's more complicated and takes extra time since there isn't a direct way to add a waterfall chart.

Step 1: Prepare Your Data

Organize your data in a table with categories and values. Include starting and ending totals, as well as gains and losses in between.

Ensure that positive values (e.g., sales) are entered as positive numbers and negative values (e.g., expenses) are entered with a minus sign.

Step 2: Insert the Waterfall Chart

Highlight the Data:

• Select the table, including both the Category and Values columns.

Insert Chart:

• Go to the Insert tab on the Excel ribbon.
• In the Charts group, click the Insert Waterfall or Stock Chart dropdown.
• Choose Waterfall from the options.

Step 3: Preview the Waterfall Diagram

Excel will automatically generate a basic Waterfall Chart based on your data.

Customizing a Waterfall Chart in Excel

After learning how to create a waterfall chart in Excel, you can enhance its clarity and appeal with waterfall chart customization in Excel. Follow these steps:

Step 1: Set the Starting and Final Balances as Totals

• Click on the Starting Balance bar in the chart.
• Right-click and select Set as Total. This will anchor the starting point of the chart to the baseline.
• Repeat the same steps for the Final Balance bar to mark it as the ending total.

Step 2: Adjust the Colors for Clarity

• Click on any bar representing a positive change (e.g., January Sales), then right-click and choose Format Data Series.
• Under the Fill & Line options, change the color to green (or another color representing a gain).
• For negative changes (e.g., January Expenses), change the color to red to indicate a loss.
• You can choose a different color for the Starting Balance and Final Balance bars to make them stand out (e.g., blue).

Step 3: Add Data Labels

• Right-click on any bar in the chart.
• Select Add Data Labels to display the numerical values on the bars.
• Adjust the position of the labels (e.g., Above, Below) for better readability.

Step 4: Adjust the Gap Width (Optional)

• Click on any bar in the chart, right-click, and choose Format Data Series.
• Reduce the Gap Width to make the bars wider and improve the visual appearance.

Step 5: Add a Chart Title

Click on the chart title and change it to something descriptive, like "Company Profit Analysis – Waterfall Chart".

Step 6: Modify the Y-Axis Scale if Needed

• Click on the Y-axis, right-click, and choose Format Axis.
• Adjust the minimum and maximum values for the Y-axis to better fit your data range.

Step 7: Review and Save Your Work

• Review the final chart to ensure all details are correctly displayed.
• Save your Excel file to preserve the chart.

The final waterfall chart will clearly show the financial journey from the starting balance to the final balance, with incremental gains and losses for each month displayed in between. This visualization helps you easily understand the impact of each financial event on the overall profit.

Also Read:

• How to Create a Pie Chart in Excel
• How to Create a Line Chart in Excel
• How to Use Pivot Tables in Excel for Data Analysis

Conclusion

Creating a Waterfall chart in Excel is a straightforward way to analyze and visualize changes in values over time or across categories. This powerful tool helps you clearly identify contributions to totals, whether in financial data, performance metrics, or other key analyses. By knowing Excel's built-in features, you can customize your chart to suit your needs and present data in an easy-to-understand format. Mastering the Waterfall chart will not only enhance your data analysis but also improve the clarity and impact of your presentations.