Which key area of Financial Management uses both financial and non-financial data to model effective...

Comprehensive and Detailed 150 to 250 words of Explanation From Positioning SAP Business Suite via SAP Financial Management Solutions documents:

Financial Planning & Analysis (FP&A) is the strategic engine of the finance department, responsible for translating corporate strategy into actionable financial targets. A defining characteristic of modern FP&A within the SAP ecosystem—specifically powered by SAP Analytics Cloud—is the ability to integrate both financial data (e.g., revenue, expenses, margins) and non-financial data (e.g., headcount, carbon emissions, units produced, customer satisfaction scores).

By combining these data sets, finance leaders can perform "Extended Planning and Analysis" (xP&A). This allows the CFO to model complex business scenarios that facilitate more accurate "steering" of the enterprise. For instance, an FP&A professional can model how an increase in raw material costs (financial) combined with a shift in carbon tax regulations (non-financial/regulatory) will impact the overall profitability of a specific product line over the next five years. This holistic view ensures that planning is not done in a vacuum but is grounded in the operational realities of the business. By facilitating real-time "what-if" analysis, FP&A provides the agility needed to adjust course quickly in response to internal performance trends or external market shifts, ensuring the organization remains on track to meet its long-term objectives.