What is liquidity scenario in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: liquidity scenario

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: An object that represents a future situation that a firm wishes to analyze in terms of liquidity risk and that applies different assumptions about risk to risk calculations via special parameters, whose values are set according to the hypothetical situation.

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• Key Concepts: 
  Liquidity scenario is a feature of the FS-LRM Liquidity and Risk Management component of SAP. It enables users to simulate and analyze the liquidity situation of their organization in order to identify potential risks and opportunities. The liquidity scenario allows users to create multiple scenarios with different assumptions and parameters, such as interest rates, exchange rates, and other market conditions. 
  
  How to use it: 
  To use the liquidity scenario feature, users must first define the parameters of the scenario. This includes setting up the time period, currency, and other market conditions. Once the parameters are set, users can then enter data such as cash flows, investments, and other financial transactions. The liquidity scenario will then generate a report that shows the liquidity position of the organization at any given point in time. 
  
  Tips & Tricks: 
  When creating a liquidity scenario, it is important to consider all possible scenarios and to be as realistic as possible. This will help ensure that the results are accurate and reliable. Additionally, it is important to regularly update the liquidity scenario with new data in order to keep track of changes in the market conditions. 
  
  Related Information: 
  For more information on FS-LRM Liquidity and Risk Management, please visit SAP's website at https://www.sap.com/products/fs-lrm-liquidity-risk-management.html