Shortfall

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Dictionary Says

Definition of 'Shortfall'

The amount by which a financial obligation or liability exceeds the amount of cash that is available. A shortfall can be temporary in nature, arising out of a unique set of circumstances or it can be persistent, in which case it may indicate poor financial management practices. Regardless of the nature of a shortfall, it is a significant concern for a company, and is usually corrected promptly through short-term loans or equity injections.
Investopedia Says

Investopedia explains 'Shortfall'

For example, a temporary shortfall for a small company may arise when an accident at its production facility impedes output and revenues in a particular month. In this case, the company may resort to short-term borrowings to meet payroll and other operating expenses.

A typical long-term shortfall is the pension shortfall faced by many organizations whose pension obligations exceed the return they can generate from their pension assets. This situation generally occurs when returns from equity markets are well below average.

Shortfall risk can be mitigated through the use of efficient hedging strategies, which aim to offer protection from adverse price movements. As an example, resource companies often sell part of their future output in the forward market, especially if they are expecting to incur substantial capital expenditures in future. Such hedging helps to ensure that the finances required for a future financial obligation are available.
Search results for

'Shortfall'

  • The Investing Risk Of Underfunded Pension Plans

    http://www.investopedia.com/articles/analyst/03/050803.asp
    ... Shortfall Risk Determining whether a company has an underfunded pension plan is
    as simple as comparing the fair value of plan assets, which includes the ...

  • Read This Before You Sell

    http://www.investopedia.com/articles/stocks/07/read-before-selling.asp
    ... After a second consecutive earnings shortfall, the market tends to lose
    confidence in the company's management and the shares suffer. ...

  • Avoiding Mistakes In Required Minimum Distributions (RMD)

    http://www.investopedia.com/articles/retirement/04/120604.asp
    ... beginning date. Those who withdraw less than the RMD amount by the deadline
    will owe the IRS an excise tax of 50% of the shortfall. As ...

  • Short Sell Your Home To Avoid Foreclosure

    http://www.investopedia.com/articles/mortgages-real-estate/08/short-sell-home-avoid-foreclosure.asp
    ... Of course, you want to sell the home for as close to the value of your mortgage
    as possible, but in a down market, there is bound to be a shortfall. ...

  • Energy Bloodbath Continues

    http://stocks.investopedia.com/stock-analysis/2011/Energy-Bloodbath-Continues-BEXP-OAS-WLL-CHK-SD0930.aspx
    ... oil. The company has enough cash and borrowing capacity to meet this shortfall
    but may need to look for financing in 2012. Brigham ...

  • Possible Effects Of An Iran Embargo - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0112/Possible-Effects-Of-An-Iran-Embargo.aspx
    ... It can do one of two things: boost oil exports from other OPEC producers to cover
    the shortfall and stabilize prices, or allow a shortage and have prices ...

  • How To Evaluate Pension Risk By Analyzing Annual Costs

    http://www.investopedia.com/articles/analyst/03/081303.asp
    ... this article I present one way (but not the only way) that can help you evaluate
    and assess whether or not a company's pension exhibits a high risk of shortfall ...

  • Will Your Retirement Income Be Enough?

    http://www.investopedia.com/articles/retirement/05/050405.asp
    ... The Employee Benefits Research Institute reports that if current trends continue,
    by 2030, the annual shortfall between the amount retired Americans need and ...

  • Muni-phobia

    http://stocks.investopedia.com/stock-analysis/2010/Muni-phobia-MCO-MHP-BAC-C-BCS0623.aspx
    ... A survey from the Center on Budget and Policy Priorities shows 46 states with projected
    shortfalls for fiscal 2010 and a total shortfall of $200 billion. ...

  • Apple Getting The Benefit Of The Doubt

    http://stocks.investopedia.com/stock-analysis/2011/Apple-Getting-The-Benefit-Of-The-Doubt-AAPL-GOOG-RIMM-NOK-MSFT-HPQ-DELL1021.aspx
    ... phone. Consequently shipments were about 15% light of consensus expectations
    and that shortfall cost about $2 billion in revenue. ...

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