The waterfall chart is a graph that shows how a starting value is affected by a series of intermediate values and finally results in a final value. The waterfall chart gets its name because the graph resembles a waterfall, with the starting value being the water at the top of the waterfall and the final value being the water at the bottom of the waterfall. The waterfall chart was first developed in the early 1990s by Dr. Hans-Georg Gemünden, who was a professor of business administration at the University of Mannheim in Germany. Dr. Gemünden’s original waterfall chart was used to show the financial effects of a series of business transactions. The waterfall chart was later popularized by Microsoft Excel, which added the ability to create waterfall charts in Excel 2010.

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Origins and Uses of the Waterfall Chart

One of the most commonly cited origins of the waterfall chart is its use in accounting and financial reporting. Waterfall charts are said to have gotten their name because of their resemblance to a waterfall, with the different chart elements cascading down in a linear fashion. They are often used to track the cumulative effect of positive and negative values over time and can be helpful in understanding how a business is performing financially. Some other early examples of waterfall charts include their use in scientific experiments to track the impact of different variables on a particular outcome. And more recently, waterfall charts have been used in data visualization to track the flow of data through different stages or systems. Overall, there is no one definitive answer to the question of where waterfall charts got their name. But they have become a popular tool in a variety of fields due to their ability to track cumulative effects over time.

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How To Make a Waterfall Chart

To make a waterfall chart in Excel, you’ll need two data sets: the first set will be the initial value, and the second set will be the component parts. Here’s how to create the chart:

  1. Create a new Excel sheet and enter the initial value in cell A1.
  2. In cells B2 through Bn, enter the component parts of the initial value.
  3. Select cells A1 through An, and click the Insert tab.
  4. Click the Waterfall chart icon, and then select the Clustered Column chart type.
  5. Excel will create the chart, and you’ll see how the initial value changes over time, with each component represented as a layer of liquid.
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Waterfall Charts for Business

Waterfall charts are often used in business to track the progress of a project or to visualize the individual stages of a sales process. Waterfall charts can be used to show the cumulative effect of positive and negative values. In the case of a project, this might include the total cost of the project, the amount of money raised, and the amount of money spent. In the case of a sales process, it could show the number of leads generated, the number of sales, and the amount of money made. They can be printed out or shared online, and they are a great way to communicate the progress of a project or the individual stages of a sales process.

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Waterfall Charts for Data Analysis

To create a waterfall chart that shows how a value compares to a target value, you first need to create a data table with two columns. The first column should contain the data points, and the second column should contain the target values. You can then create a waterfall chart by inserting a new chart, selecting the waterfall chart type, and then selecting the data table. Excel will automatically create the rectangles and cumulative line. You can also create a waterfall chart by using a formula to calculate the percentage difference for each data point. The formula for this column is “=(C3-B3)/B3”. You can then create a waterfall chart by inserting a new chart, selecting the waterfall chart type, and then selecting the data table.

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Overall, the eponymous waterfall chart is a useful way to display and interpret data in a variety of fields.

 

 

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