As with other charts, it also has a few names – you might be more familiar with the name bridge chart if you’re in finance and looking at performance. No matter the name, it works basically the same. You start with an initial value and then, step by step, you add or subtract the next value. The image below shows you two different outcomes of adding or subtracting 20 from an initial value of 100.
Now that we have the basics in place, let’s see how it looks if we add in multiple steps. It’s almost like bricks hanging in the air: Each step shows you the absolute difference compared with the previous step. Also, at the end of a waterfall chart, we usually have a bar going from zero that shows the final value from all the additions and subtractions. So now, it’s possible to see not only how the value has changed but also what the accumulated end value is. In the example below, I’m visualizing a simplified P&L statement for a company. All the positive bars are income, and all negative bars are expenditures.
What I also like with the waterfall chart is how you can add subtotals along the steps. There could be situations where you not only want to know the absolute value of the change, but also the absolute value at that position in the visualization. Thus, you can add in a subtotal bar that shows you the accumulated value at that position. I’ve taken the example above and added a subtotal (below) for total revenue.
From this image, we can now also see the accumulated income as part of the story, similar to how we would show it in a pivot table or a P&L report. This visualization can, of course, be extended to include many more steps.
As usual, I hope this post gave you an appetite to try out new data visualization techniques using the waterfall chart. It can be an incredibly useful tool in providing a visual representation of the cumulative impact of sequential changes. Try it as you deepen your data exploration and mine data you’d like to visualize.