Waterfall Chart
A chart that shows how a starting value increases or decreases through a series of intermediate steps to arrive at a final total — like a bridge connecting start to finish.
// 01 — The chart
What it looks like
A waterfall chart showing how revenue builds up through additions and subtractions to arrive at net income. Green bars are gains; red bars are losses.
// 02 — Definition
What is a waterfall chart?
A waterfall chart (also called a bridge chart, flying bricks chart, or Mario chart) shows how an initial value is affected by a series of positive and negative changes. Each bar “floats” at the level where the previous bar left off, creating a staircase-like visual that connects the starting value to the final total.
Positive changes are typically colored green and push the running total upward. Negative changes are colored red and pull it downward. The first and last bars usually represent totals and sit on the baseline, while intermediate bars float to show incremental changes.
Waterfall charts excel at one specific job: explaining how you got from point A to point B. They decompose a change into its component parts, making it immediately clear which factors had the biggest impact — positive or negative — on the final result.
Origin: The waterfall chart was popularized by the management consulting firm McKinsey & Company in the 1990s. It became their signature way to present financial analysis in client presentations, earning it the nickname “McKinsey chart.” It has since become a staple of financial reporting worldwide.
// 03 — Anatomy
Parts of a waterfall chart
// 04 — Usage
When to use it — and when not to
- Explaining how a starting value changes through sequential additions and subtractions
- Breaking down financial statements — revenue to net income, budget variance analysis
- Showing the composition of change between two time periods
- Presenting to stakeholders who need to understand what drove a result
- You have 4–10 intermediate steps that each contribute to the total
- The story is about the journey from start to finish, not just the endpoints
- Comparing independent categories — use a bar chart instead
- Showing trends over time — a line chart is more appropriate
- You have more than 12–15 steps, which makes the chart crowded
- Values don't form a sequential chain from start to finish
- Your audience needs to compare magnitudes rather than trace a process
- The changes are all the same direction — a simple stacked bar works better
// 05 — Reading guide
How to read a waterfall chart
Follow these steps whenever you encounter a waterfall chart in the wild.
Identify the start and end totals
Look for the solid bars anchored to the baseline — typically the first and last bars. These represent the overall starting point and the final result. Understanding these two values frames the entire story.
Note the direction of the overall change
Is the final total higher or lower than the start? This tells you whether the net effect of all intermediate steps was positive or negative — the big-picture takeaway before diving into details.
Read each floating bar as a change
Each intermediate bar represents an addition (green, going up) or a subtraction (red, going down). The height of each bar shows the magnitude of that change. Read them left to right to follow the sequence.
Find the biggest movers
Which bars are tallest? These are the factors that had the most impact on the final result. In financial contexts, these are usually the items that drove the biggest gains or losses.
Follow the connector lines
The dashed lines connecting each bar show the running total at each step. Follow them to see how the cumulative value evolves across the chart — where it peaks, dips, and ultimately lands.
// 06 — Pitfalls
Common mistakes
Missing connector lines
Without the dashed lines linking bars, readers can't tell where each floating bar starts. The connector lines are essential — they show the running total and make the staircase pattern readable.
Inconsistent color coding
If increases and decreases aren't consistently color-coded, readers will misinterpret which bars are positive and which are negative. Always use one color for gains and another for losses throughout the chart.
Too many intermediate steps
Adding every small line item creates a cramped, hard-to-read chart. Group minor items into an 'Other' category to keep the bar count between 4 and 10 steps for maximum clarity.
Not labeling the values
Waterfall charts need labels on each bar because the floating position makes it hard to read exact values from the axis. Always add data labels showing each step's value.
Ordering steps arbitrarily
The order of intermediate bars should follow a logical sequence — chronological, by magnitude, or by business process. Random ordering breaks the narrative flow the chart is meant to tell.
// 07 — In the wild
Real-world examples
Income statement bridge
Companies use waterfall charts in earnings calls to show how revenue translates into net income — through cost of goods sold, operating expenses, interest, and taxes. Each step shows exactly where money went.
Year-over-year variance analysis
Managers use waterfall charts to explain why this year's result differs from last year's. Each bar represents a contributing factor — price changes, volume changes, new products, lost customers — building a complete story of the change.
Population change decomposition
Demographers use waterfall charts to show how a country's population changed: births added, deaths subtracted, immigration in, emigration out. The chart reveals which factors contributed most to population growth or decline.
// 08 — Quick reference
Key facts at a glance
Decomposing change from start to finish
Bridge chart, flying bricks, Mario chart
Green = increase, red = decrease
4 – 10 intermediate bars
Connector lines linking each step
Excel, Power BI, Tableau, Google Sheets
// 09 — Variations
Common variations
Standard waterfall
The classic form — a starting total, sequential changes, and an ending total with connector lines between bars.
Stacked waterfall
Multiple sub-items are stacked within each step — showing further breakdown of what contributed to each change.
Horizontal waterfall
Bars run left to right instead of bottom to top — useful when step labels are long or when reading direction matters.
Subtotal waterfall
Includes intermediate subtotal bars (gray) that anchor back to the baseline — useful for multi-section financial breakdowns.
// 10 — FAQs
Frequently asked questions
What is a waterfall chart?+
A waterfall chart (also called a bridge chart, flying bricks chart, or Mario chart) shows how an initial value is affected by a series of positive and negative changes. Each bar "floats" at the level where the previous bar left off, creating a staircase-like visual that connects the starting value to the final total.
When should you use a waterfall chart?+
Use a waterfall chart when explaining how a starting value changes through sequential additions and subtractions. It also works well when breaking down financial statements — revenue to net income, budget variance analysis, and when showing the composition of change between two time periods.
When should you avoid a waterfall chart?+
Avoid a waterfall chart when comparing independent categories — use a bar chart instead. It is also a poor fit when showing trends over time — a line chart is more appropriate, or when you have more than 12–15 steps, which makes the chart crowded.
How is a waterfall chart different from a bar chart?+
Both a waterfall chart and a bar chart can look similar at first glance, but they answer different questions. Reach for a waterfall chart when the comparisons and patterns it was designed to reveal match what you need to communicate, and choose a bar chart when its particular strengths better fit your data and audience.
What is another name for a waterfall chart?+
Waterfall Chart is also known as Bridge chart, flying bricks, Mario chart. The name varies between fields, but the visualisation technique is the same.
What size of dataset works best for a waterfall chart?+
Waterfall Chart works best for Decomposing change from start to finish. Outside that range the chart either looks empty or becomes too cluttered to read clearly.