Debt schedule

The debt schedule sits between the cash flow statement and the income statement. It takes the cash the business generated, applies it in the order the credit agreement requires, and returns two things: the closing balance for each tranche, which goes to the balance sheet, and the interest charge, which goes back to the income statement.

The order is not the borrower's choice. Mandatory amortisation is paid first, then the cash sweep applies surplus cash from the top of the structure downward, revolver and senior term loans before anything junior. That is the opposite of what a borrower would prefer, since repaying the cheapest debt first saves the least interest, but the sweep exists to protect lenders rather than to optimise the borrower's cost.

Each tranche is built as a corkscrew, so a reader can see opening balance, drawings, mandatory repayment, sweep and closing balance as separate lines. Collapsing several tranches into one blended facility is a legitimate simplification under time pressure, provided it is stated.

It is also where the circularity lives. Interest depends on the average balance, the balance depends on the cash swept, and the cash available to sweep is struck after interest, which is why this one section is the reason a model needs iterative calculation or a deliberate convention to avoid it.