Waterfall Chart
Also called: Bridge chart, Walk chart, Cascade chart
A waterfall chart shows how a starting value becomes an ending value through a series of positive and negative changes, with each change drawn as a floating bar.
How to read a waterfall chart
The first bar is the starting value (e.g. last year’s profit). Each bar after it floats up or down from where the previous one ended:
- Increases step up (often green).
- Decreases step down (often red).
- The last bar is the ending value, drawn from zero so it can be compared with the start.
The result reads left to right like a sentence: “We started at $4.0M, gained $1.1M from new customers, lost $0.4M to churn, and ended at $4.7M.”
Common uses
Ordered from most to least common.
1. P&L breakdown (revenue → net income)
The classic finance waterfall. It starts with revenue, takes away each cost layer, and shows subtotals (gross profit, operating profit) as full bars along the way, so readers can see where the margin goes.
2. Budget vs. actual variance
Starts at the budget, ends at the actual, and each bar in between is a driver of the gap (volume, price, mix, cost). It answers the question every monthly review asks: why did we miss (or beat) the plan?
3. Year-over-year bridge
Last year’s revenue or profit on the left, this year’s on the right, and the drivers of the change in between. It’s the chart at the top of this page.
4. Cash flow bridge
Opening cash to closing cash, via operating cash flow, capital spending and financing. Useful when profit and cash tell different stories.
5. Headcount movement
Starting headcount, plus hires, minus leavers and transfers, equals ending headcount. A favourite of HR dashboards because it shows why the total changed, not just that it did.
Best practices
- Keep it to about 5–8 steps. Group the small movements into “Other” so the big drivers stand out.
- Sort the steps logically, either in process order (revenue → costs → profit) or by size.
- Label every bar with its value. The chart is only useful if people can read the numbers.
Mocking up a waterfall chart
Finance stakeholders tend to have firm opinions about which steps appear and in what order. Agree that on a mockup first so the order is settled before anyone writes the DAX or calculated fields.
