Growth Financing Gap
Short definition
The growth financing gap is the slice of asset growth, implied by the sales target, not covered by retained profit and target new debt. It is closed with equity, extra debt or a growth cut.
Detailed explanation
Sales ↑ → receivables, inventory, capacity ↑. If internal profit and sustainable debt cannot cover that, a gap opens. Working-capital drag makes the gap larger than EBITDA suggests.
Ignoring the gap is de facto loading short-term debt or suppliers. That is not temporary WC finance; it is a structural pecking-order strain.
Why it matters for the CFO
The budget says “we are profitable, we will grow” while the cash gap shows in 13 weeks. The bank reads the gap as permanent use of a working-capital line.
How it is calculated
Açık ≈ Δvarlık − dağıtılmayan kâr − hedef Δborç
Δassets = growth × assets/sales (or NWC + capex separately). Internal = b × profit. Target ΔD is the SGR assumption.
Variables in the formula
- EFN: external financing need
How to read it
Gap / sales is the capital intensity of growth. Without better margin and NWC days, a growth target produces a gap.
Numerical example
Sales +20 mn TL, assets/sales 0.6 → +12 mn TL assets. Retained profit 4, target new debt 3 → gap 5 mn TL.
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Definitions are educational. They are not investment, credit or tax advice.