How to make a waterfall chart in Excel

Step 1: set up the bridge data

A waterfall needs one column of labels and one column of values, in the order the bars should appear:

• The start value as the first row (Net profit 2025: 410,000).
• One row per step, with increases as positive and decreases as negative numbers. A cost that rose by 96,000 lowers profit, so it is entered as −96,000.
• The end value as the last row (Net profit 2026: 484,000), taken from the actual income statement, not calculated from the steps.

Then check that the bridge closes: start + all steps − end must be 0. Here 410,000 + 185,000 + 62,000 − 96,000 − 74,000 + 18,000 − 21,000 = 484,000, so the check is 0. If it is not, a driver is missing or has the wrong sign, and the chart would quietly show a gap. Do this check before you draw anything.

Worked example: a profit bridge from $410,000 to $484,000

Columns A and B are all the built-in waterfall chart needs. Columns C to F are the helper columns for the stacked-column method in older Excel. The company and its figures are fictional.

Worked example: a profit bridge from $410,000 to $484,000

	A	B	C	D	E	F
1	Step	Change	Running total	Base	Up	Down
2	Net profit 2025	410,000	410,000	410,000
3	Sales volume	185,000	595,000	410,000	185,000	0
4	Price increase	62,000	657,000	595,000	62,000	0
5	Cost of goods	-96,000	561,000	561,000	0	96,000
6	Staff costs	-74,000	487,000	487,000	0	74,000
7	Marketing	18,000	505,000	487,000	18,000	0
8	Rent & energy	-21,000	484,000	484,000	0	21,000
9	Net profit 2026	484,000	484,000	484,000
10	Bridge check (must be 0)		0

For the built-in chart, select A1:B9 and mark rows 2 and 9 with Set as Total. For the stacked-column version, chart A1:A9 together with D1:F9.

Step 2: insert the waterfall chart (Excel 2016 and later)

• Select the labels and values, here A1:B9. Do not include the check row or helper columns.
• Go to Insert and click the waterfall icon in the Charts group (in Microsoft 365 it is called Insert Waterfall, Funnel, Stock, Surface, or Radar Chart), then choose Waterfall. You can also find it under Insert > Recommended Charts > All Charts > Waterfall.

Excel draws each positive value as an increase and each negative value as a decrease, each step starting where the previous one ended. Data labels are switched on by default. The chart type exists in Excel 2016 and later on Windows and Mac, including Microsoft 365. Excel 2013 and older do not have it, which is what the stacked-column method below is for.

Step 3: Set as Total for the start and end bars

Excel does not know that the last row is a total. Out of the box it treats 484,000 as one more increase and stacks it on top of the running total, so the last bar floats far above the rest. To fix it:

• Click the last bar once (the whole series is selected), then click it again so only that bar is selected.
• Right-click it and choose Set as Total. Alternatively tick Set as total under Format Data Point > Series Options.

Do the same for the first bar. It already starts at zero, but as a total it gets the total color, which makes start and end easy to read. Totals in the middle work the same way, for example a gross profit subtotal in a longer bridge.

Step 4: format it so it reads in five seconds

• Colors: the legend has three entries, Increase, Decrease and Total. Click an entry twice to select that group of bars, then pick a fill. Green up, red down and a neutral total is the convention most readers expect.
• Connector lines: on by default (Format Data Series > Show connector lines). They help the eye follow the running total.
• Title: say what moved, for example Net profit 2025 to 2026: +$74k.
• Order: the bars follow the row order. Group the drivers logically (revenue drivers first, then costs) or sort them by size within each group.
• Labels: for large numbers, use a number format such as #,##0,"k" on the data labels so they do not overlap.

Older Excel: the stacked-column method

Before 2016, waterfalls were built from a stacked column chart with an invisible base series. The helper columns in the example do the work:

• Running total (C): the level after each step, =C2+B3 filled down.
• Base (D): where the visible bar starts, the lower of the level before and after the step: =MIN(C2,C3). For the start and end rows the base is the total itself.
• Up (E): =MAX(B3,0), the size of an increase, otherwise 0.
• Down (F): =MAX(-B3,0), the size of a decrease as a positive number, otherwise 0.

Then select A1:A9, hold Ctrl and add D1:F9, and choose Insert > Column > Stacked Column. Base is the first series, so it sits at the bottom of each stack. Select the Base series and set Fill: No fill and Border: No line. The steps now float. Finally click the first Base bar twice to select just that point and give it a solid fill, and do the same for the last one: those two bars are the start and end totals. Set the gap width to around 50% and color Up green and Down red.

The method has one limit: a stacked column cannot cross zero, so it breaks when the running total turns negative (for example a bridge from a loss to a profit). The built-in waterfall chart handles that case, which is one more reason to use it when you can.

When a waterfall chart is the right choice

Use a waterfall when the story is how you got from one number to another: a profit bridge, a cash flow walk from opening to closing cash, a budget-to-actual variance, headcount at the start of the year plus hires minus leavers. If you only want to compare a few values side by side, a sorted column or bar chart is clearer. If you want to show parts of a total over time, use a stacked column. The bridge also pairs well with a break-even analysis when you explain why profit moved with volume and costs.

Common mistakes

• Forgetting Set as Total. Without it the end value is stacked on top of the running total and the last bar floats at almost double height.
• Wrong signs on cost lines. A cost that went up is a step down for profit. Enter it as a negative number.
• A bridge that does not close. If start + steps ≠ end, the chart still draws, it is just wrong. Keep a check cell that must show 0.
• Including the check row or helper columns in the selection. For the built-in chart select only the labels and the one value column.
• Stacked-column waterfalls that cross zero. The invisible base cannot go negative, so steps around zero are drawn wrong. Use the built-in chart.
• Too many tiny steps. Ten bars of 2,000 each hide the story. Group small items into one "Other" step.