What are waterfall charts and how do I use them?

What are waterfall charts and how do I use them?

Waterfall charts are a type of data visualization that helps to display the cumulative effect of sequentially introduced positive or negative values. They are particularly useful for understanding how an initial value is affected by a series of intermediate values, leading to a final value.

Can you give me an example of a waterfall chart?

Sure! Imagine a company's revenue over a year. You start with an initial revenue of $100,000. Then, you add $20,000 from new sales, subtract $10,000 from returns, and add $5,000 from upsells. A waterfall chart would visually show these changes step by step, leading to a final revenue of $115,000.

What software can I use to create waterfall charts?

You can create waterfall charts using various software tools like Microsoft Excel, Google Sheets, Tableau, and Power BI. Each of these tools has features that allow you to easily create and customize waterfall charts.

Are there any best practices for designing waterfall charts?

Yes, some best practices include keeping the chart simple, using contrasting colors for increases and decreases, and clearly labeling each step to enhance readability.