Debt Balance Projections

Our second step in constructing the debt schedule involves projecting debt and preferred stock balances. Some instruments are subject to mandatory repayment (i.e. scheduled maturity), while others are not, as described in our last step. Preferred stock retirement is a type of optional repayment, which we assume does not happen in the absence of a specific catalyst for redeeming the preferred. We have tailored the terminology used to describe mandatory and optional repayment to suit each type of debt and preferred instrument, but these terms are synonymous (e.g. “mandatory repayment” is conceptually no different from “scheduled maturity”).

 

Speed Up Financial Modeling with Macabacus


Try the leading Microsoft 365 add-in for finance and banking. Create complex financial models and branded presentations in record time.

Start a Free Trial

Note that we have assumed the bank revolver commitment is $100mm, but this is a just guess. We probably would not know the actual bank commitment without further diligence.

Finally, we link the debt schedule to the balance sheet. Our balance sheet now balances!

Discover more topics

Build an operating model
In this tutorial, we will walk through how to build a general industry business operating model.
Read more
Build an M&A model
In this section, we demonstrate how to model a merger of two public companies in Excel.
Read more
Build an LBO model
In this tutorial, we will walk you through building an LBO model in Excel.
Read more
Asset and Stock Deals
The first step in purchase price allocation, or PPA, is to determine the purchase price.
Read more