Advanced Finance
Debt Schedule with Revolver
The circularity every simple LBO model skips. Interest depends on the debt balance, the balance depends on how much cash is left after interest, and the cash sweep depends on both. This walks one year of it properly: EBITDA down to cash for debt service, mandatory amortisation, then a sweep against the term loan — or a revolver draw if the year comes up short.
Inputs
- EBITDA
- Cash taxes
- Capital expenditure
- Increase in working capital
- Opening term loan balance
- Term loan cash interest rate
- Mandatory amortisation (% of opening term loan)
- Opening revolver balance
- Revolver interest rate
How to use this calculator
- Enter EBITDA and the three things that take cash before the lenders get paid: cash taxes, capital expenditure, and the increase in working capital. Growth eats working capital, so this number is usually positive and usually bigger than people expect.
- Enter the opening term loan and revolver balances with their interest rates, and the mandatory amortisation percentage from the credit agreement: 1% a year is common on an institutional term loan, 5% or more on a bank facility.
- Read the waterfall down the rows: cash available before financing, then interest, then the mandatory payment, then whatever is left sweeping against the term loan.
- If the revolver draw line is anything other than zero, the year did not fund itself. Debt went up, so next year's interest goes up too. Run it again with next year's EBITDA to see whether it recovers or compounds.
- Cut EBITDA by 15% and watch what happens to the sweep. That is the stress test a lender runs before agreeing the structure, and it is the one that tells you whether the capital structure fits the business.
What each term means
- Cash sweep
- A clause requiring surplus cash to repay debt early rather than sit on the balance sheet or go to shareholders. Often a percentage that steps down as leverage falls.
- Mandatory amortisation
- The scheduled principal repayment you owe whether or not the year went well. Missing it is an event of default, not a late payment.
- Revolver
- A credit line you can draw and repay as needed. It absorbs the shortfall in a bad year, which is exactly why a rising revolver balance is an early warning sign.
- Circularity
- Interest depends on the debt balance, and the balance depends on how much cash is left after interest. The two have to be solved together, by iteration, which is why models with this in them are slow.
- Average balance interest
- Charging interest on the average of the opening and closing balance rather than the opening one, on the assumption repayments happen evenly across the year.
Educational disclaimer: Outputs are simplified educational estimates built from the numbers you enter — they are not financial, legal, tax, or investment advice, and real decisions deserve verified figures and qualified professionals.