How to Create Waterfall Chart in Excel - Practical Guide

Learn to create a waterfall chart in Excel to visualize cumulative effects of sequential values on a total. Waterfall charts are ideal for showing how positive and negative contributions build toward a final result, such as profit/loss breakdowns or cash flow analysis. This skill enables you to communicate complex financial data clearly to stakeholders.

Why This Matters

Waterfall charts are essential for financial presentations and business analysis, making complex data relationships immediately understandable. They're widely used in management reporting, variance analysis, and executive dashboards.

Prerequisites

•Basic Excel knowledge and data entry skills
•Understanding of column and row data structures
•Familiarity with inserting charts (Insert menu)

Step-by-Step Instructions

Organize your data structure

Create a two-column table with categories in column A and values in column B. Include starting value, intermediate changes, and ending value rows. Ensure negative values use minus signs for decreases.

Select your data range

Highlight your entire data range including headers (both columns A and B, all rows). Click and drag from the first cell to the last cell containing data.

Insert a waterfall chart

Go to Insert > Charts > Waterfall Chart (or Insert > All Charts > Waterfall in older versions). Excel will automatically create the waterfall chart from your selected data.

Configure chart elements

Right-click the chart and select Chart Elements to add title, axis labels, and legend if needed. Adjust formatting via Format Chart Area for colors, fonts, and style.

Fine-tune connector lines and formatting

Click on individual bars to change colors (positive bars typically green, negative red). Toggle connector lines visibility via Chart Design > Change Chart Type options for clarity.

Alternative Methods

Using stacked column charts as waterfall substitute

Create a stacked column chart with calculated helper columns showing cumulative values. This method works in older Excel versions without native waterfall support but requires more manual setup.

Using third-party Excel add-ins

Install specialized charting add-ins from Microsoft AppSource that offer advanced waterfall customization options. Useful for complex financial reporting requiring extensive formatting control.

Tips & Tricks

✓Use consistent color coding: green for increases, red for decreases, gray for totals to improve readability.
✓Include a starting balance and ending balance row to frame the waterfall clearly for viewers.
✓Keep category names concise and descriptive to avoid chart overcrowding.
✓Sort your data logically (chronological or by impact) rather than alphabetically for better storytelling.

Pro Tips

★Set connector line visibility to True for enhanced clarity; this helps audiences follow the flow between categories.
★Use negative percentages in your source data to automatically create downward-flowing bars without manual formatting.
★Apply data labels to each bar showing the exact value; right-click bars > Add Data Labels > Value.

Troubleshooting

Chart shows all bars as positive (no decreases visible)

Check that decrease values in your source data are entered as negative numbers (e.g., -500, not 500). Re-select your data range and ensure Excel recognizes negative values.

Connector lines not appearing between bars

Right-click the chart > Format Data Series > Series Options and ensure connector line visibility is enabled. In some Excel versions, this option appears under Chart Design.

Total doesn't match expected result

Verify your source data calculations are correct and that you've included all contributing values. Create a quick SUM formula in a helper cell to validate the math before charting.

Chart legend missing or incorrectly labeled

Right-click chart > Chart Elements > Legend and ensure it's enabled. Verify your column headers are properly named to generate correct legend entries.

Related Excel Formulas

SUM SUMIF SUMIFS

Frequently Asked Questions

What Excel versions support waterfall charts?

Waterfall charts are natively supported in Excel 2016 and later, including Excel 2019 and Microsoft 365. Older versions can achieve similar results using stacked column charts with helper columns.

Can I create a waterfall chart from raw transaction data?

Yes, but you'll need to summarize your raw data first by grouping transactions into categories and calculating net changes per category. Use SUMIF formulas to aggregate your raw data into the waterfall structure.

How do I change the colors of positive and negative bars?

Right-click any bar in the chart, select Format Data Series, and adjust fill colors. You can set different colors for positive values, negative values, and totals individually using the Fill & Line options.

Is it possible to add percentage changes to waterfall charts?

Yes, you can add data labels showing percentages by right-clicking bars and selecting Add Data Labels, then formatting to show values as percentages. However, the chart itself displays absolute values; percentages are shown as labels only.

What's the best way to present waterfall charts in PowerPoint?

Copy your waterfall chart from Excel and paste it into PowerPoint as an embedded object. This maintains interactivity if you update source data, or paste as an image for a fixed presentation.