With a stacked Waterfall Chart, they can take each category and divide the bars into components that show data for each location. They look at factors like utilities across all locations, rent, staffing, etc. Stacked Waterfall Chart: Sometimes, your Waterfall Chart components are divided into smaller sections to give your visualization an added dimension.įor example, let’s say a chain of restaurants takes a look at the company’s total gains and losses. It results in a clean, concise look that is perfect for a Waterfall report in Excel or other programs. You can make a vertical list of your values, including damaging losses, and then chart the data next to it with the vertical Waterfall Chart. It’s much better than staggering or angling them. Vertical Waterfall Charts allow you to display labels as we naturally read them: horizontally. When you have lots of data items in your Waterfall Chart, readability can be an issue in the horizontal structure. Vertical Waterfall Chart: While less common, vertical Waterfall Charts do have some practical benefits to users. The horizontal shape is ideal because it can include multiple factors and creates the true “bridge” shape for which this chart is known.Īnother benefit of this Waterfall Chart template is that it creates a more natural structure of reading left to right when telling the story of your data’s journey from start to finish. The individual bars and floating bricks appear along the X axis, while the Y axis shows the numerical measure (usually dollars, but not always). Horizontal Waterfall Chart: This is the standard and most popular Waterfall visualization. Let’s look at some of the popular Waterfall Chart models. Every kind of Waterfall Graph has slightly different functions, which can impact the advantages and disadvantages of this visualization. Like many chart types, there are a few variations to the Waterfall Plot that are helpful to know. The opposite is true if you experience a high level of loss during the period. So, if most of your contributing factors are positive, you’ll have a larger ending value than the initial one. Most Waterfall Charts will show a final large bar to express the end value of your data. The individual floating bricks are often labeled or colored to reflect negative and positive values. The size and placement of these bars show the magnitude of each item and its impact, good or bad, on the results.Ĭollectively, these components show all of the plus and minus values that change the starting value throughout the chart. They reflect the impacts of various categories or factors on the initial value. These chart components are smaller and “floating,” meaning they don’t share a baseline. Moving from left to right (or top to bottom in the case of a vertical Waterfall Chart), there are several “floating bars.” Often, there is a fuller bar on the left-hand side of the chart, showing your starting value. However, Waterfall Graphs have a mix of full bars and floating ones. We’re used to seeing bar charts with a common baseline. The appearance of the Waterfall Chart can be challenging to understand right away. Understanding how to read a Waterfall diagram is vital to properly utilizing this chart type with your own data. Thus, the cash flow Waterfall Chart is only the tip of the iceberg regarding ways to use this powerful visualization! How to Read Waterfall Chart Visualizations These visualization tools adapt this financial model to fit into other spaces and analysis methods. Since its creation, many variations of the Waterfall Chart have appeared. People love seeing exactly where their money is going to and coming from! McKinsey & Company was able to use their Waterfall Chart creation not only to acquire new clients, but also to build relationships with existing ones. You can physically see how your money behaves, even across multiple investments or factors. This is where a visualization like the Waterfall Chart comes in handy. However, we don’t always understand the context of those figures. When we hear things like a $10,000 loss or a $6,700 gain, we register the information and know what the values mean. More specifically, the consulting firm needed a way to visually demonstrate to clients where their money was going and what factors contributed to its growth or loss.Īfter all, it is easy to get lost when talking about raw financial figures. McKinsey & Company needed an effective visualization to show clients to help them better understand their money. This is mainly because a strategic financial consulting firm, McKinsey & Company, helped popularize this visualization. Many people consider the Waterfall Chart a financial charting tool. A Brief History of the Waterfall Chart Model
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