LBO & Paper LBOHard

In year 3 of your LBO model, free cash flow is negative $15. Walk through exactly how the revolver handles this across the statements and the debt schedule.

Model answer

The revolver is the model's circuit breaker against negative cash. Debt schedule: the model draws 15 on the revolver so the cash balance holds at the minimum cash floor; the drawn balance now accrues…

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