Through gap analysis, an organization compares its current performance against targets.
Gap analysis can be useful when companies do not use their resources, capital or technology to the fullest.
By identifying the gap, the firm’s management team can create an action plan to move the organization forward and fill performance gaps.
The gap analysis consists of four steps: defining the goals of the organization, assessing the current state, analyzing gap data, and writing a gap report.
Gap analysis can also be used to assess the difference between assets and liabilities that are sensitive to changes in interest rates.