when to use waterfall chart??
can you give me some examples in which situation we use waterfall charts???
Water charts are very impressive in certin cases, one can present data break ups. such as you can see veriable expenses and fix expenes. it will show different levels by there Over-heads. its very popular and easy to read in case of income or expenses compaired to revenue.
Financial Reporting: Net Income Analysis
Imagine a company wants to understand how it achieved its net income for the year. A waterfall chart can visually break this down in a step-by-step process. It starts with the total revenue (the money made from sales), then subtracts various costs (like manufacturing costs, operating expenses, taxes) one by one. Each step shows the impact of these costs on the total revenue. In the end, what's left is the net income. This type of chart makes it easy to see which costs have the biggest impact and how the company arrived at its final profit.
Budget Analysis for a Project
Suppose you're managing a project and you have a certain budget. A waterfall chart can help you understand how your budget is allocated and used. It starts with the initial budget, then adds or subtracts expenses as they come (like costs for materials, labor, marketing). You can see at each step how much of your budget is left. This visual representation helps in tracking whether you're over or under your budget at various stages of the project.
Sales Analysis Over a Period
For a business, understanding sales performance over a specific period (like a quarter or a year) is crucial. A waterfall chart in this context would start with the sales figure at the beginning of the period. As the chart progresses, it adds positive values (like new sales or returning customers) and subtracts negative values (like lost customers or refunds). This way, you can see how each factor contributes to the final sales figure at the end of the period. It's a clear way to identify which factors helped increase sales and which ones caused a decrease.
In all these scenarios, the waterfall chart is like telling a story of how a starting value (like revenue, budget, or initial sales) is influenced step by step by different factors, leading to a final outcome.