Determining historical cash flow and DSC

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Posted by: William Hollins Jul 26 2004, 03:41 PM
If I have a fiscal year ending 12/31/03 statement and I am trying to determine cash flow for 2003, do I use the CPTLD figure for 2003 or would I use the 2002 number? I guess my question is since the balance sheet is kind of like a picture of how the company stands at that date is the CPLTD listed for 2003 or would it be for the upcoming year, 2004?

Posted by: loanuniverse Jul 26 2004, 04:21 PM
For determining cash flow for 2003 you use the CPLTD shown in the 12/31/02 balance sheet. As CPLTD is the portion of long term debt to be repaid within the next 12 months.

There is a common error which is that people use the current portion of long term debt in the latest balance sheet. But this is the wrong number to calculate the debt service for the year that just ended. You can make an argument that you should be looking forward when underwriting, but even if you buy that I have seen people use the CPLTD number even in cases where they are refinancing the debt with a whole new structure. That does not make sense as they are not really looking forward.
Author: Commercial Loan Underwriter