This type of visualization is commonly used for several purposes:
- Show Process Dynamics: for instance, to illustrate the movement of funds, investment flows, and more.
- Compare Target vs. Actual: it helps in comparing the target value with the actual value, revealing where things went wrong.
- Understand Factors Influencing Change: it demonstrates how and due to what factors the initial value transitions to the final value, allowing for factor analysis.
Individual product sales, income and expenses, metric changes within a certain timeframe, and so on could all be included in the initial value being changed. Companies such as Apple, for example, employ waterfall charts to highlight the factors that contributed to changes in sales volume. It identifies which product lines contributed to revenue declines and which were more popular within a certain time period. This study helps to determine what needs to be improved in order to turn negatives into positives.