How to Create a Waterfall Chart in Excel
Excel has a built-in waterfall chart type available since Excel 2016. This guide covers the exact steps to create one from your data, mark the total bars correctly, and customize colors for increases and decreases.
What is a waterfall chart in Excel?
In Excel, a waterfall chart is a built-in chart type under the Insert menu. You provide a simple two-column table — category and value — and Excel handles the floating bar positions automatically. Positive values appear as increase bars, negative values as decrease bars. You then manually mark your start and end bars as 'totals' so they sit on the baseline. Available in Excel 2016, Excel 2019, Excel 2021, Microsoft 365, and Excel for Mac.
How to make a waterfall chart in Excel
Prepare your data
Create two columns: one for category labels (e.g. Revenue, COGS, Gross Profit, Operating Expenses, Net Income) and one for values. Enter positive numbers for increases and negative numbers for decreases. Do not include running totals as values — Excel calculates these. Your start and end bars (e.g. Revenue, Net Income) should contain their actual values, not deltas.
Select your data range
Click and drag to select both columns including the header row. For example, A1:B8 for a seven-step P&L bridge. Make sure no blank rows are included in the selection.
Insert the waterfall chart
Go to Insert → Charts → click the Waterfall, Funnel, Stock, Surface or Radar Chart dropdown → select Waterfall. Excel creates the chart with floating bars based on your data. The chart may look wrong at this stage — that's expected until you mark the total bars.
Mark the total bars
Right-click the first bar (your starting value, e.g. Revenue) → Format Data Point → check Set as total. Repeat for the last bar (e.g. Net Income) and any intermediate subtotals (e.g. Gross Profit). These bars drop to the baseline instead of floating. This step is manual — Excel does not auto-detect totals.
Customize the colors
Double-click any bar to open Format Data Series. Set fill colors for each series: green for increase bars, red or orange for decrease bars, gray or navy for total and subtotal bars. Consistent color coding makes direction immediately obvious without requiring readers to check the labels.
Add data labels
Right-click the chart → Add Data Labels. This shows the value of each change above or below each bar. To display currency symbols or thousands separators, format the source data cells via Format Cells (Ctrl+1) before inserting the chart.
When should I create a waterfall chart in Excel?
Financial statements and P&L bridges
The most common use case. A waterfall chart is the standard way to show how revenue becomes net income through a sequence of deductions — COGS, gross profit, operating expenses, EBITDA, D&A, EBIT.
Budget vs actual variance analysis
Show which budget line items caused a variance from plan to actual. Each bar represents one category's over- or under-spend. End bar shows total variance.
Headcount changes
Start with opening headcount, add hires, subtract departures and terminations, land on closing headcount. Useful for HR reviews and board updates.
Cash flow statements
Opening cash balance → cash receipts → cash payments by category → closing balance. Gives a clear picture of how cash moved through the period.
Components of a waterfall chart in Excel
Start bar
The initial value of your sequence. Sits on the baseline. Must be marked as 'Set as total' via right-click → Format Data Point.
Increase bars
Positive value bars that float upward from where the previous bar ended. Typically colored green.
Decrease bars
Negative value bars that hang downward from where the previous bar ended. Typically colored red or orange.
Subtotal and total bars
Intermediate or final running totals. These connect back to the baseline. Must be manually marked via right-click → Format Data Point → Set as total. Excel will not detect them automatically.
Connector lines
Thin horizontal lines that connect the top or bottom of one bar to the start of the next, showing continuity. Can be toggled on or off in Format Data Series → Series Options.
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