Debt Schedule and Circular References
The debt schedule is designed to track every major type of debt a company has, and the associated interest and payment schedules for each. It also helps track the cash available that could be used to pay down those debts and any interest income that could be generated from cash or cash equivalents available. Simply put, a debt schedule helps us better track the debt and interest. There is also a very important “circular reference” that is created once the debt schedule is complete and properly linked through the rest of the model. This circular reference is crucial in helping us determine various debt situations, such as the absolute maximum amount of debt a company can raise while making sure there is still enough cash to meet the interest payments.
It is important to note that the debt schedule should be the very last statement to build due to this circular reference. Make sure you have a properly balancing balance sheet before beginning the debt schedule. If you do not have a balancing balance sheet, moving on to the debt schedule will only complicate things further.
DEBT SCHEDULE STRUCTURE
In the model, Rows 252 through 256 will help us track the amount of cash we have available to pay down the debt. This can be used if we want our model to pay down debts automatically as soon as we have the cash available to do so.