Balance Sheet - Liabilities and Equity
- 01:03
Understand how to model the liabilities and equity in the balance sheet.
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Glossary
Balance Sheet Forecasting Modeling EquityTranscript
When it comes to liabilities, we start with short-term borrowings or the revolver, and the best suggestion here is leave it blank for now. Once you've got your cash flow statement, that will give you a much better idea of your cash situation or maybe your revolver or short-term borrowing situation. What about operating liabilities and other non-current liabilities? Well, forecast them using reasonable assumptions. If you think they're linked to revenue or cogs or maybe taxes, then take that driver and use it as the assumption. With the long-term debt, try to assume some kind of debt issuance or repayments, or maybe they'll just be nothing. The larger companies, you'll have an idea of their debt repayment schedule from their financial accounts. Lastly, for total equity, you can use your BASE calculation, so you'll start with beginning equity, add things like net income, subtract dividends, and maybe then add or subtract a share issuance or repurchase.