If you’re using Excel 2016 there is a new way to visualize financial statements. The upside is these charts are easy to create – as long as you’re aware of a nuance – but the downside is that these charts can’t be shared with anyone using Excel 2013 or earlier.
We know it’s often difficult to get the measure of an income statement by simply glancing at it. Numbers quickly blur together, and there’s often very little frame of reference of how the numbers flow from Total Revenue down to Net Income. Creating a waterfall chart can help.
To create a waterfall chart in Excel 2016, you must first create a summary version of your income statement that should only include major totals or subtotals. Next, as illustrated in Figure 1:
- Click on any cell within your summarized income statement.
- Select the Insert menu in Excel 2016.
- Select Recommended Charts.
- Select the All Charts tab within the Insert Chart dialog box.
- Select Waterfall.
- Click OK.
- A waterfall chart will appear within your worksheet. Initially your waterfall chart will flow uphill, which is a physical impossibility. This is the nuance that you’ll need to overcome.
About David Ringstrom, CPA
David H. Ringstrom, CPA, is an author and nationally recognized instructor who teaches scores of webinars each year. His Excel courses are based on over 25 years of consulting and teaching experience. His mantra is “Either you work Excel, or it works you.” David offers spreadsheet and database consulting services nationwide.