In step 2, we forecast key balance sheet operating items We don't need to do a full balance sheet, We only need to forecast balance sheet items that are going to affect the income statement and the cash flow statement In this model there's only one balance sheet item that we need to forecast and that's our debt financing fees That's going to impact our income statement, which will then affect tax expense, which will then affect cash available to repay debt So I start with the ending balance at the deal date (our debt financing fees), that's up in our sources and uses of funds So I scroll up and there are my debt financing fees 7.4 I know that we'll start the next period with beginning balance 7.4 so I link down to last year's ending balance My amortization amount says that I can spread that debt financing fee over the period of the debt financing So I take the 7.4 (I lock onto that) and I'm going to divide that by the period of the debt financing That's up in our assumptions and my debt financing fees amortization years is 5. And I'm going to lock onto that as well I want this to be a negative so I hit minus 1 And I can see my debt financing fees gradually reduce The only problem I have here is that if I copy this to the right for 10 years, it will keep producing below zero My debt financing fees will go to zero, then it will go the negative 1.5, negative 3 which is nonsensical So what I want to do here, is I want to use a MIN function I want it to be a minus minimum of the fee where I've just calculated We know that figure there is 1.5 I then want the minimum of 1.5 and the beginning balance And that beginning balance will change as we copy to the right Eventually that beginning balance will get to zero So eventually I'll be asking I want the minimum of 1.5 and 0 and it will thus give me 0, and it will stay at 0 If I close the brackets here, let's copy that to the right and let's check that it does indeed stop So in year 1, it's going down 1, 2, 3, 4, 5, gets to 0 and then year 6 it stays at 0 Fantastic! It doesn't go below that, so 7, 8, 9 and 10 Now the other balance sheet items that we might need would be the operating items and they will affect our cash flow statement If we go down to our cash flow statement and have a quick look, we've already hard coded this in So we've got some forecast from management to help us out here However if we didn't already have these provided to us, these would be other balance sheet items that we need to forecast Because it affects our cash flow available for debt repayments in the cash flow statement