Non Current Liabilities
This article explains how Non Current Liabilities are handled in Model Reef.
You will learn:
How loans and other long term obligations are represented.
How balances move over time as drawdowns and repayments occur.
How Non Current Liabilities link to cashflows and valuation metrics.
1. What are Non Current Liabilities
Non Current Liabilities usually include:
Medium and long term loans.
Bonds or similar structured debt if modelled.
Other long term obligations represented via Liability variables.
Short term parts of these obligations may be shown in Current Liabilities depending on your reporting design, but the core behaviour is driven by the Liability variables.
2. Liability variables and loan behaviour
You represent loans using Liability variables.
For each loan you specify:
Opening balance or initial drawdown.
Interest rate and any rate drivers.
Repayment profile, such as amortising or interest only.
Timing of drawdowns and repayments.
Model Reef then:
Calculates interest expense based on balances and rates.
Updates loan balances with drawdowns and principal repayments.
Tracks any interest payable where accrual and payment timing differ.
3. Non Current Liabilities across the statements
Across the statements:
P&L
Shows interest expense below EBIT.
Balance Sheet
Shows loan balances within Non current Liabilities.
May also show a short term portion in Current Liabilities depending on categorisation.
Tracks any interest payable as part of current obligations.
Cashflow Statement
Shows interest paid as an Operating cashflow.
Shows drawdowns and principal repayments in Financing cashflows.
Cash Waterfall
Shows interest paid and net debt movements in dedicated waterfall lines.
This gives a full picture of leverage and debt service.
4. Non Current Liabilities and valuation
Non Current Liabilities influence valuation through:
Interest costs that reduce earnings and free cashflows.
Principal repayments and new drawdowns that alter cash available to equity.
Changes in leverage that may change discount rates and equity risk.
Equity valuation typically uses free cashflow to equity after debt service. Project valuation may focus on free cashflows before financing but still needs to account for debt service feasibility.
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