Principal and Interest on Financial Statements
Hi, I have a question on bond maturity date. From the credit agreement, the bond's maturity is at the beginning of fiscal year 2031 (the fiscal year ends in June 30 and the bond will mature on July 1 2030). In my calculation of FCF, do I need to subtract the principal on fiscal year 2030 forecast or 2031 forecast? If I should include it on the 2031 forecast since it is within the 2031 fiscal year, what about the interest? I do not need to pay interest again because I already payoff the bond, however, in calculation interest rate * (beginning + ending balance of bond outstanding) / 2, I still have interest number on my excel. Thanks!
A couple questions to simplify this: 1. Why do you need to project FCF out 15+ years? 2. Can you just assume the bond gets re-fi'd and keep paying the same interest in perpetuity without ever repaying the principal?
If 1 and 2 don't help, conceptually the FCF should be subtracted in FY 2031, and you would NOT need to pay interest in FY 2031. However, since you're using beginning balance for interest, and you need to have the cash to pay if off the first day in 2031 anyway, you could put the principal payoff in 2030 which would not impact your cash and allow you to keep the integrity of your interest formula.
1, I am doing a distressed bond analysis, so the projection is until 2050. 2, i am currently assuming that they will pay off the term bond according to their maturities.
Thank you very much fryguy22!
I am sorry I did not quite get you. I am new to distressed analysis and I do so according to the previous financial modeling version in my company. Anything wrong?
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