What is 'funding gap' in SAP FS-LRM - Liquidity and Risk Management?

funding gap - Overview

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: The difference between cash inflows and outflows.

funding gap - Details

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  Key Concepts: 
  Funding gap is a term used in SAP FS-LRM Liquidity and Risk Management. It is the difference between the amount of funds available to a company and the amount of funds needed to cover its liabilities. It is calculated by subtracting the total liabilities from the total assets. 
  
  How to use it: 
  The funding gap can be used to identify potential liquidity risks and to assess the financial health of a company. It can also be used to determine whether a company has enough funds to cover its liabilities and whether it needs additional financing. 
  
  Tips & Tricks: 
  It is important to monitor the funding gap on a regular basis in order to identify any potential liquidity risks. Additionally, it is important to consider other factors such as cash flow, debt levels, and asset quality when assessing the financial health of a company. 
  
  Related Information: 
  The funding gap is closely related to other financial metrics such as cash flow, debt levels, and asset quality. Additionally, it is important to consider macroeconomic factors such as interest rates and inflation when assessing the financial health of a company.