LBO Modelling - Balance Sheet and Cash Sweep
Hi all,
I am currently a student training LBO modelling and I have the following problem.
After doing a cash sweep, my balance sheet does not balance anymore.
So I had very simple assumptions:
- Assets:
- Cash
- Working Capital
- PP&E
- Goodiwl
- Liabilities:
- Working Capital
- Debt
- Equity
- Equity
After I used my whole CashFlow my Debt has been reduced. However, my assets did not change since my Change in Cash is Zero. How can I balance the BS. Can I just use equity as a plug? So the change in Debt would be added to my Equity Balance? Is this correct?
Edit: Thanks I found the problem.
However, I have a follow on question. How do I model a carry loss forward? If I have a negative netincome, can I declare this as a carry forward and model it as a deferred tax assets? Or does the negative net income still directly flow into shareholders equity. In this scenario, how do I keep track of my Net operating losses?
Thanks
Check if net income is correctly flowing into your shareholders equity balance sheet line.
Your change in cash can’t be zero, since you swept it to repay debt, i.e. that should have been reflected in the cash flow statement under financing cash flow. The closing cash balance as a result of net movements (incl. that cash sweep) is a balance sheet item that should fix the issue.
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