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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