When you guys calculate interest expense, do you use a circ and calculate it based on average debt balance, or do you avoid the circ and just go off of beginning balance?
It seems like going off of beginning balance would be more conservative, but if you're paying down debt quickly then average balance might be more accurate. What's the "best practice"?
| +192 | Americas M&A League Table Q2 Updated | 76 | 4h |
| +142 | New Article: Dramatic Slide as UBS #22 (US) & New Leadership Desperately Needed | 36 | 14h |
| +121 | Restructuring: Anti-climactic Experience | 31 | 16h |
| +92 | IB Net Worth / Savings Check | 42 | 4h |
| +78 | A COMPLETE GUIDE TO SUMMER INTERNSHIP RECRUITING | 12 | 3d |
| +68 | Woman who emptied Knicks trashcan on street then stole it was DEI exec, worked at JPMorgan Chase | 16 | 1h |
| +51 | Boutique firm wants access to my LinkedIn? | 40 | 2d |
| +38 | Investment Banking is Hard | 17 | 2d |
| +37 | 2026 VAULT PRESTIGE RANKINGS | 24 | 6h |
| +31 | PWP vs BofA | 24 | 12h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
From my experience, the average balance is used.
Average balance. That's why the model is circular.
~~~~~~~~~~~ CompBanker
What about for the times when you set the rate to a monthly one, from an annual rate? Do you just divide the annual rate by 12 or do you do something else? I've been taught to do the former but I think I saw a model where the monthly rate was in the formula: ((1+annual rate)^(1/12))-1.
Ullam et ducimus non ducimus in hic. Aut est nesciunt velit veniam necessitatibus enim odit. Fugit ut dolorem itaque nobis praesentium. Aut corrupti impedit possimus aut magni dolores provident. Dolor odit enim id sint.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...