Glossary
What is a waterfall chart?
Waterfall chart: A waterfall chart, also called a bridge chart, shows how a start value turns into an end value through a series of positive and negative steps, each drawn as a floating bar that begins where the previous one ended.
A waterfall chart, also called a bridge chart, shows how a start value turns into an end value through a series of positive and negative steps. The first and last bars are totals that stand on the baseline. Every bar in between floats: it begins where the previous bar ended, rises for an increase and falls for a decrease, and so shows what added to the total and what took away from it.
Example
The slide below bridges EBITDA from Q3 2025 to Q3 2026, in million euros. Read from left to right: the first bar is the start value of 4.8, volume, pricing and utilization add 3.6 together, energy and wages take away 1.5, and the last bar closes at 6.9.
Where it shows up
| Use | Start | Steps | End |
|---|---|---|---|
| Profit bridge | Last year's EBITDA | Volume, price, mix, costs | This year's EBITDA |
| Revenue bridge | Revenue last quarter | New customers, expansion, churn | Revenue this quarter |
| Cash bridge | Opening cash | Operating cash flow, investment, financing | Closing cash |
| Budget variance | Budget | Variance per cost line | Actual |
How to build one
- Pick a start and an end the audience cares about, such as plan and actual, or this year and last year.
- List the drivers and make them add up. The steps must sum to the difference between the two totals. Group small items into one bar called Other.
- Keep it to about five to eight steps. More steps make the bars small and the message vague.
- Use one order. Follow the income statement, or put the largest step first, or put all increases before all decreases, and keep the same order in every bridge of the deck.
- Print the signs. Label the bars “+1.6” and “−0.6”, and give the totals a different color from the steps.
- Write the title as the finding. “Margin expansion came mostly from volume and better network utilization” says more than “EBITDA bridge”.
Excel and PowerPoint 2016 and later have a built-in Waterfall chart type. Mark the first and last bar as totals, or they will float like the steps. In older versions, build it from a stacked column chart with an invisible base series.
Typical mistakes
- Steps that do not add up. If a hidden “Other” bar is the largest, the bridge explains nothing.
- Too many steps. Ten small bars bury the two that matter.
- Mixed units. Euros and percentages cannot share one bridge. A margin bridge works only if every step is in percentage points.
- An unmarked axis cut. Total bars that do not start at zero exaggerate the change. If you must cut the axis, mark the break.
- A waterfall for two values. With no steps between them, a column chart is simpler.
Related terms
A driver tree breaks a metric into its drivers, and a waterfall chart shows how much each driver contributed to a change in it. The guide to choosing the right chart shows when a bridge beats a bar chart. Strip it down with the data-ink ratio and title it with an action title.
FAQ
Frequently asked questions
What is the difference between a waterfall chart and a bridge chart?
None in meaning. Bridge chart is the usual name in finance and consulting, waterfall chart the usual name in software such as Excel and PowerPoint. Both show a start value, the steps that change it and an end value.
When should I use a waterfall chart?
When you want to explain how one value became another through additive drivers, such as profit last year to profit this year, budget to actual, or opening cash to closing cash. To compare categories, use a bar chart.
How many steps should a waterfall chart have?
About five to eight. Group small items into one bar called Other, because tiny steps are hard to read and bury the drivers that matter.
What colors should a waterfall chart use?
One color for the totals, one for increases and one for decreases, kept the same across the deck. Print the signed value on every step, so the chart does not rely on color alone.
Keep reading
Charts and numbers
- Free toolSlide contrast checker
Check the WCAG 2.2 contrast ratio of two slide colors. See AA and AAA results for text and charts, a live slide preview and the nearest colors that pass.
- GlossaryChartjunk
Chartjunk is decoration in a chart that does not help the reader understand the data, a term from Edward Tufte. Examples, the erase test and what research says.
- GlossaryHarvey balls
Harvey balls are round pictograms that show how far a criterion is met, from empty to full in quarter steps. Meaning, symbols and how to use them on slides.
- GlossaryGantt chart
A Gantt chart shows a project's tasks as bars on a time axis, with milestones as markers. Definition, how to read it and how to simplify it for a slide.
- GlossaryTwo-by-two matrix
A two-by-two matrix sorts items into four quadrants using two criteria. Definition, well-known examples such as the Eisenhower matrix, and how to build one.
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