# Waterfall Chart

A waterfall chart is a visual representation of how an initial value increases and decreases by a series of values leading to a final value. Commonly used in financial contexts, the chart can also be used for a statistic or variable which goes through changes, positive or negative, where the intermediate values can either be time-based or category based. It helps in understanding the cumulative effect of sequentially introduced positive or negative values through color-coded columns.

### Quick details

What: Discover Interconnections, Proportion

Why: Grow through a simple way of change analysis

## History of Waterfall

Popular as the flying bricks chart due to its apparent suspension of columns (bricks) in mid-air, the waterfall chart is also known as a Mario Chart. Often in finance, it has also been referred to as a bridge. The waterfall chart is often used by strategy consultants to show the sources of change behind two values and is considered to be popularized by the strategic consulting firm McKinsey & Company in its presentations to clients.

A waterfall chart

## When to Use a Waterfall?

### 1When you need to explain a change which occurred from one to another time period

Use waterfall charts for understanding or explaining the gradual transition in the quantitative value of an entity that is subjected to increment or decrement. In financial analysis, you can use it to display how a net value is arrived at through gains and losses over time or between actual and budgeted amounts. While changes in cash flows or income statement line items can also be shown via a waterfall chart along with non-business applications include tracking demographic and legal activity changes over time.

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### 2When you need to explain a development which occurred in the same time period

Use a Multiple Series waterfall chart when you need to feature various columns/subcategories as proportions of the cascade steps along with the total values. This can be accomplished by a more complex structure waterfall feature multiple columns with total values, data points crossing the X-axis and multiple series waterfalls with stacked boxes and connectors between charts drawn across sums per each category.

A multi-series Waterfall chart
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## Types of Waterfall Charts

A minor variant of the waterfall chart (also called the cascade chart) shows intermediate sums along the way before showing the final cumulative sum.

### 2. Multiple Series Waterfalls

The series are stacked and connectors between charts drawn across sums per each category.

## When not to use a Waterfall?

### 1When you need to show part to whole relationship

Do not use waterfall when doing category breakdown, in such cases pie charts are a more reliable and comprehensive view of the data composition.

### 2When you need to compare values which are close in size

Do not use waterfall when doing category breakdown, in such cases pie charts are a more reliable and comprehensive view of the data composition.