Waterfall chart

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This page refers to a 2D floating column diagram showing increases and decreases, for the type of 3D graph representation, see waterfall plot.
A typical waterfall chart

A waterfall chart is a form of data visualization that helps in determining the cumulative effect of sequentially introduced positive or negative values. The waterfall chart is also known as a flying bricks chart or Mario chart due to the apparent suspension of columns (bricks) in mid-air. Often in finance, it will be referred to as a bridge.

Waterfall charts were popularized by the strategic consulting firm McKinsey & Company in its presentations to clients.[1][2]

Overview

The waterfall chart is normally used for understanding how an initial value is affected by a series of intermediate positive or negative values. Usually the initial and the final values are represented by whole columns, while the intermediate values are denoted by floating columns. The columns are color-coded for distinguishing between positive and negative values.

Applications

A waterfall chart can be used for analytical purposes, especially for understanding or explaining the gradual transition in the quantitative value of an entity which is subjected to increment or decrement.

A waterfall chart showing profitability analysis.

Waterfall charts can be used for various types of quantitative analysis, ranging from inventory analysis to performance analysis.

Inventory analysis using waterfall chart

References

  1. ↑ "How to Create a McKinsey-style waterfall chart". Idea transplant. 
  2. ↑ Ethan M. Rasiel. The McKinsey Way. McGraw–Hill, 1999.
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