The core cash gap is the difference between a company's current cash position and its core cash target. It indicates whether a company has excess cash that can be invested or if it needs to secure additional funds to meet its core cash target.

Formula: Current Cash Position - Core Cash Target

A positive Core Cash Gap figure indicates the company has surplus cash, over and above what is required for taxes due and a reserve for two months worth of overheads, which can be reinvested.

A negative Core Cash Gap figure means the company doesn't have the recommended amount of cash in reserve. However, if the negative is within 20% of the Core Cash Target then it's close to having a resilient balance sheet.