Creating an accurate debt schedule is essential for robust financial modeling. Here is how you can effectively set up long-term debt:

1. Enter the Assumptions

Start by outlining key assumptions like the debt amount, interest rate, repayment terms, and covenants.

2. Debt Schedule

• Opening Balance: The initial debt amount at the beginning of the period.
• Drawdowns: Record any new borrowings during the period.
• Repayments: Schedule principal repayments as per the agreed terms.
• Closing Balance: Calculate by adding drawdowns and subtracting repayments from the opening balance.

3. Interest Calculation

• Interest Expense: Based on the beginning debt balance or the average debt balance during the period.
• Interest Payment: Typically assume a cash outflow during the period.

4. Linking to Financial Statements

• Ensure debt balances and interest expense flow through to the balance sheet, income statement, and cash flow statement.