Set Up a Waterfall Chart in Excel: A Practical Guide

To set up a waterfall chart in Microsoft Excel for Microsoft 365 on Windows, place each category in one column and its positive or negative change in the next, select the data, then choose Insert > Insert Waterfall, Funnel, Stock, Surface or Radar Chart > Waterfall. In the resulting chart, right-click the first and final bars and choose Set as Total so they display as the starting and ending balances.

What a waterfall chart shows

A waterfall chart explains how a starting value changes through a sequence of additions and deductions to arrive at a final value. Rather than showing every bar from the same zero baseline, it makes each change begin at the running total reached by the previous step. This is why the bars appear to rise or fall across the chart like a staircase.

For example, a cash balance might begin at $100, increase by $60 in sales, decrease by $35 in costs, and decrease by $15 in tax. The ending balance is $110. The $60 sales bar starts at $100 and ends at $160; the cost bar then runs from $160 down to $125. The chart makes the sequence and the contribution of each item visible at a glance.

Waterfall charts are useful for explaining changes in profit, cash, inventory, headcount, project budgets, or other quantities that accumulate over time or across causes. They are sometimes called bridge charts because the floating bars connect a starting figure to an ending one. They work best when the order of changes has a meaningful explanation.

Prepare the data before inserting the chart

Use a simple two-column table. Put category labels in the first column and the amounts that change the running total in the second. Include a starting balance, the intermediate changes, and an ending balance. A small example could look like this:

Beginning cash — 100
Sales — 60
Operating costs — -35
Tax — -15
Ending cash — 110

The arithmetic is 100 + 60 – 35 – 15 = 110. The first and last amounts are balance figures, not changes to add on top of other values. Excel initially treats every row as a change, so you must mark those two bars as totals after making the chart. The intermediate rows should contain signed changes: use positive numbers for increases and negative numbers for decreases.

Keep the categories and values together in adjacent columns, with one row per item. Add column headings if useful, but avoid blank rows within the range. If the table includes several numerical columns, select only the labels and the one series you want to chart; otherwise Excel may create an unintended extra series. Numbers stored as text can also cause missing or misleading bars, so check that the cells contain numeric values.

Create the waterfall chart in Excel

Arrange the category names in a column and the corresponding values beside them. Include the beginning and ending balance rows.
Select the complete range, including the labels and values. If you have headings, include them too.
On the ribbon, choose Insert > Insert Waterfall, Funnel, Stock, Surface or Radar Chart > Waterfall. Excel inserts a chart based on the selected range.
Set the beginning and ending bars as totals, as described in the next section. This is the step that makes the chart read as a bridge from one balance to another.
Give the chart a meaningful title and check that the categories appear in the intended order.

On a standard Windows keyboard, Ctrl+Z undoes an accidental edit to the chart or its source data. To change the underlying values later, edit the worksheet cells; the chart normally updates from its source range. To include additional rows outside that range, select the chart and use Chart Design > Select Data to adjust the chart data range, or expand the source table if the chart is based on an Excel table.

Mark beginning, ending, and other total bars

Click a bar once to select the series, then click that same bar again to select just the individual data point. Right-click the selected bar and choose Set as Total. Repeat for the final balance. A total bar is anchored to the horizontal axis instead of floating from the preceding running balance. That visual reset distinguishes a reported subtotal or final result from an ordinary increase or decrease.

You can mark intermediate subtotals as totals too. For instance, a profit bridge might show revenue, expenses, an operating-profit subtotal, further adjustments, and net profit. Mark the operating-profit subtotal and net profit as totals if each represents a standalone balance at that point in the explanation. Do not mark every category as a total: doing so removes the cumulative effect that makes the chart useful.

If the total is incorrect, check both the source number and the point setting. Excel does not calculate a special ending figure for you simply because the label says “Ending balance”; the value in the cell must equal the intended final result. In the cash example, the ending value should be 110. If the underlying changes later change, update the ending value yourself and confirm that its bar is still set as a total.

Format the chart for easy reading

Formatting should help readers distinguish increases, decreases, and totals without obscuring the sequence. Excel assigns different default colors to these kinds of bars, but workbook themes and custom formatting can affect their appearance. If the distinction is unclear, select an individual bar, open the Format Data Point pane, and choose a fill under Fill & Line. Use consistent colors throughout the workbook and maintain enough contrast against the chart background.

Connector lines help show how one step leads to the next. Select a bar, open Format Data Series, and look under Series Options for Show connector lines. If the connectors make a crowded chart harder to read, turn them off; the bar positions still represent the running totals. To show amounts directly, choose Chart Design > Add Chart Element > Data Labels and select a suitable label position, such as Outside End. Check for overlapping labels when there are many categories or values close to zero.

Use a descriptive title such as “How operating cash changed in Q2,” and label the value axis with a unit when the context is not obvious. A chart showing thousands of dollars should make that scale clear. Keep category names concise, but do not abbreviate them so much that readers cannot tell what a step represents. If labels are long, widen the chart or wrap the source labels in worksheet cells and check whether the chart remains legible.

Choose the right categories and order

A waterfall is most informative when each step has a clear place in the narrative. For a monthly cash bridge, order the items from the opening balance through the changes to the closing balance. For a comparison between forecast and actual results, the categories might be the opening forecast, favorable and unfavorable variances, and the final actual result. Sorting the changes from largest to smallest can be useful when ranking contributions, but it changes the story from chronological order to magnitude order. Choose one ordering principle and make it clear.

Grouping related items can make a chart easier to follow. For example, several small expense categories might be combined into “Other expenses” if the detail is not essential to the point. Keep the underlying figures available in the worksheet or a supporting table so the summary remains traceable. If readers need to compare several independent values rather than understand how changes build to a total, a bar or column chart may be clearer.

Common problems and how to fix them

The first or last bar floats. Select that individual bar and choose Set as Total. Excel does not infer total status from a label such as “Start” or “End.”
The final value does not reconcile. Add the starting balance and every signed change, then compare the result with the ending balance. In the example, 100 + 60 – 35 – 15 equals 110.
A decrease appears to increase. Check the sign in the worksheet. A deduction must be negative; formatting a positive value to look like a deduction does not change its effect on the chart.
Bars or labels are missing. Check for blank cells, text-formatted numbers, or a selection that omitted part of the table. Confirm the chart’s source range through Chart Design > Select Data.
Excel charts the headings or extra columns as data. Reselect the two intended columns, including their labels, or correct the series and category ranges in Select Data.
The chart looks cluttered. Reduce unnecessary categories, shorten labels, resize the chart, or remove data labels that overlap. Keep enough detail to explain the result without forcing every source row into one visual.

One common misconception is that a waterfall chart automatically knows which values are subtotals. It does not: the chart uses the values and category order you supply, and you designate total bars with Set as Total. Another is that a negative bar should always extend below zero. In a waterfall, a negative change usually descends from the current running level; it may remain entirely above the axis if the running balance stays positive.

Desktop, Mac, and web considerations

The Windows Microsoft 365 ribbon path above is the main procedure. Excel for Mac also supports waterfall charts in current desktop editions, although the ribbon layout and the way you open a context menu can vary by version. Use the Insert tab to find the Waterfall chart type; Control-clicking or using a two-finger click can open the contextual menu on a Mac when a right-click is not configured. The Set as Total command applies to an individual selected data point.

Excel for the web has a different interface and its available chart-editing commands can depend on the current feature set. If the Waterfall option or a required formatting command is not available in the web ribbon, open the workbook in the Excel desktop app to create or finish the chart. A chart already saved in the workbook can still be shared with people who view the file, but check the web version before relying on it for detailed edits.

When another chart type may be better

Use a waterfall when the question is “How did this starting amount become that ending amount?” A clustered bar chart is often better for comparing separate categories or groups side by side. A line chart is usually better for showing a measure changing over regular time intervals, especially when the trend matters more than the contribution of individual steps. A stacked column chart can show parts of a whole across several groups, but it is not a substitute for a sequential bridge.

For a simple comparison of two totals with no meaningful intermediate changes, two bars may communicate the result more directly than a waterfall. The choice depends on the reader’s question: use the least complicated chart that makes the relationship unmistakable.

Frequently Asked Questions

How do I make the first and last bars start from zero?
Select each bar individually, right-click it, and choose Set as Total. This anchors that value to the chart baseline and marks it as a starting, ending, or subtotal balance rather than a change.

Can a waterfall chart have more than one total?
Yes. Mark any intermediate subtotal as a total using Set as Total. This is useful for showing checkpoints such as gross profit and operating profit before continuing to a final result.

Why is my negative value shown as a floating bar?
Floating bars are normal in a waterfall chart because each change starts at the running total from the previous step. A negative change moves downward from that level; it does not necessarily extend below zero.

Can I create a waterfall chart from dates?
Yes, if each date represents a sequential change and the values are signed increases or decreases. If the values are independent measurements recorded on dates, a line chart may communicate the time trend more clearly.

Does Excel automatically calculate the ending total?
No. Enter the ending balance in the worksheet and check that it equals the starting balance plus all changes. Then mark its bar as a total so the chart displays it as a standalone balance.

Can I change the increase and decrease colors?
Yes. Select a bar or data point and change its fill in the Format Data Point pane. Apply colors consistently so readers can identify increases, decreases, and totals without relying on color alone.

Try it: the Percentage Formula Generator: percent of, percent change, increase and decrease, with the formula.

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Sources: Function behaviour and menu paths: Microsoft Support documentation for Excel. Method & sources

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