The Debt Schedule in 3-Statement Models, LBO Models, and Credit Models

Learn more: breakingintowallstreet.com/co...
NOTE: There is a "typo" around the 11:30 mark, and we link to the incorrect Beginning Cash balance. It should be $6 billion instead of $6.397 billion. Please go by the Excel file and screenshots. KZbin does not allow us to correct or edit videos.
Excel Files, Resources, and Table of Contents:
breakingintowallstreet.com/kb...
0:00 Intro
1:53 Summary of Debt Schedules by Model Type
5:37 Debt Schedules by Complexity and Features
7:22 Debt Schedules in 3-Statement Models
9:46 Debt Schedules in LBO Models
15:07 Debt Schedules in Credit or Refinancing Models
31:40 Recap and Summary

[@wenkaiyang1487]

Awesome video! This is literally what I need. Thank you. looking forward to more.

[@financialmodeling]

Thanks for watching!

[@financialmodeling]

Excel Files, Resources, and Table of Contents: breakingintowallstreet.com/kb/leveraged-buyouts-and-lbo-models/debt-schedule/ NOTE: There is a "typo" around the 11:30 mark, and we link to the incorrect Beginning Cash balance. It should be $6 billion instead of $6.397 billion. Please go by the Excel file and screenshots. KZbin does not allow us to correct or edit videos. 0:00 Intro 1:53 Summary of Debt Schedules by Model Type 5:37 Debt Schedules by Complexity and Features 7:22 Debt Schedules in 3-Statement Models 9:46 Debt Schedules in LBO Models 15:07 Debt Schedules in Credit or Refinancing Models 31:40 Recap and Summary

[@pawankumarsahu1527]

This is really awesome

[@financialmodeling]

Thanks for watching!

[@Fatmanstan606]

Absolutely beautiful module, the web is super scant on refinance modeling which is super prevalent now in superday modeling tests, thank you

[@financialmodeling]

Thanks for watching! And glad this was helpful.

[@denyagusman155]

You are so great! and many thanks for giving it for free :D

[@financialmodeling]

Thanks for watching!

[@xhesitase9729]

Great Video. Thanks Brian!

[@financialmodeling]

Thanks for watching!

[@stanmarsh646]

OMG thank you so much great!!!

[@financialmodeling]

Thanks for watching!

[@cyrokkk]

Hi Brian, thanks for the content ! I struggle a bit with the way the MIN function works here. What happens if the excess cash flow is positive but inferior to the Revolver drawn portion ? The function will pick the amount of excess cash flow as amount to repay ? So no more cash ? Thanks !

[@financialmodeling]

Yes, the function just applies the excess cash flow to repay debt principal. It's not "no more cash" because this is *excess cash flow* above the minimum cash balance, so the company still has enough cash for its operational needs after the repayment. It's just that it no longer has an excess cash balance above that minimum requirement.

[@JoseFelixVelascoBarbachano]

Thanks for the video! Is the calculation of interest income from cash simplified or is it completely correct to take the final balance from the previous period?

[@financialmodeling]

It is technically more accurate to use the average balance, but that creates circular references, so we tend to use the beginning balance to simplify.

[@szesiangchong9397]

Is revolving credit usually the last thing to do in the 3FS model? Since you usually need forecasted FCF within the calculation for the cash available for pay down

[@financialmodeling]

Yes, usually the Revolver and/or debt schedule is the last thing you want to add (and maybe link the interest calculations to the statements after that).

[@ericgregorious7047]

Can u get around circular reference. For me personally I calculate revolver based on beginning instead of average...

[@financialmodeling]

Yes, just use the beginning balances for fees and interest. Circular references are easy to avoid in standard company models with Debt that's based on a multiple of EBITDA.

[@닝닝닝]

Hi, I was wondering if I want to prep for potential private credit modeling test, which video or course do you recommend? I only have experience in DCF and 3 statement modeling. 😂

[@financialmodeling]

We don't have anything specifically on private credit, but the Core Financial Modeling course (breakingintowallstreet.com/core-financial-modeling/) has many LBO examples and a debt vs. equity case study. If you want something more advanced, the Advanced course covers similar topics but for much more complex models.

[@dbsk06]

Amortization = mandatory debt repayments 11:47

[@financialmodeling]

Yes, but note that that's not universally true. "Amortization" is used in different ways in models; this is just one specific meaning tied to debt principal repayments.

[@francocacciuttolo1156]

how do I find the minimum cash balance?

[@financialmodeling]

If it's not disclosed in the company filings or case study, you can estimate it based on Cash as a % of Revenue or OpEx in previous periods (take the average or follow the trend). It's difficult to do anything more than that without direct disclosure from the company.

[@MichaelHolder24]

Cash at beginning of FY23 is 6000, not 6393

[@financialmodeling]

Yes, this was a "typo." The screenshots in the written version of this are all correct if you refer to that. I did not want to go back and re-do this entire segment just to fix that one part (and unfortunately, KZbin does not let you modify videos or add corrections once they've been uploaded).