So I am making a 15 year operating model for a pre-revenue company. How do I deal with negative cash and/or negative equity that the projections have a few years down the line. Is it fine to leave it be since the eventual cash flows put the company (+) later? Should I model a preferred/common equity issuance? Don't know how to handle it.
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For cash you would usually set a minimum cash balance and draw on a revolver to fulfill any cash needs, then pay that revolver off later when cash is coming in. For equity it is fine to have it negative if your retained earnings balance is actually an accumulated deficit (negative income), it should balance fine.
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