Waterfall Chart (also known as Bridge Chart) is a highly effective visual method to present changes, both positive and negative, between a start and an end point. The values of the starting and end points are shown as bar graphs, and the gap or change between the two points is bridged by smaller, color coded bar graphs. The size of each bar graph is directly dependent on its value. Here is a great video tutorial on creating a fully automated waterfall chart in Excel 2013, or earlier.
Accounting Made Simple: Accounting Explained in 100 Pages or Less
Would you like to work with me to get one on one training, or to solve your specific workplace challenges, book your 15 minute consultation here: https://calendly.com/learnaf
Note: If you would like to learn in detail, how to calculate sales variances and the impact they have on sales $, profit $ and profit margin %, and how to explain performance vs budget and prior periods, click here for a detailed video course (at a special discounted price for readers of this post) showing exactly how this is done. You also learn how to analyse and present the results of the variances to management.
Why use a Waterfall Chart?
Well, this is because it is one of the best visual representation of changes, growth or transition from a start point to end point. It clearly shows what items contributed the most to the change from a starting point and an end point. If color coded properly, it also shows, which items have impacted positively and the ones that have impacted negatively.
Be careful though, not to add too many items in the breakdown or bridge because it becomes complicated for the readers to distinguish the key items. The main point of the waterfall chart is to highlight key contributors to growth or change between two points. A good practice is to keep the items between 5 to 7, but certainly try not to let them exceed 10 items.
Are you an accountant or finance professional looking to improve your financial analysis and presentation skills? Make sure you connect with me by subscribing to my email list, Click here to subscribe to my email list.