Having set aside cash for the debt service reserve account, we're now ready to figure out how much is gonna go to dividends. Except we can't really do that yet. And that's because the lenders are going to tie our hands when it comes to dividends and they're going to say we've got a covenant or other rule in place in our loan agreements. That means you can only pay a dividend if we have a debt service coverage ratio of 2, quite a high one. Now we'll go ahead and keep the whole thing going, but we'll have to sidestep some lines which are shown in yellow. And we've got the result of our waterfall, which cash shaft financing.

And after we add, if you've made DSRA requirement as negative, the DSRA requirement, you can see that leads to the cash available for distributions because the model is incomplete at the moment that is coming out as a negative.

Once we hook up the model and for example, feed the debt service back into revenue as part of the capacity charge, we'll find that that starts working. When we do eventually get the dividends going, assuming we can pay dividends, they will take all available cash once they've taken the cash we'll have the cash left in the bank account and the cash attracting interest will be what we've got left after the debt and then after the dividends.

It's important to note that the DSRA requirement is not a cash flow, it's an allocation of cash and I've repeated that a couple of times in the videos, but I think it's quite error prone so I will keep repeating that.

You can see it's got some interesting results and initially quite counterintuitive and that's because I think with these models, like I keep saying, we're kind of wired to see negatives as cash flows. And so when we see these negatives, we expect them to appear as negatives and then to end up with say negative cash. Conceptually what's happened here is we've said after debt we've got no money. We need to set aside some money for the DSRA. So we really don't have any money for dividends, so we better not pay any dividends, which means we didn't pay any dividends and that meant that we ended up with well still no money. And then a little bit more interesting over here, we've ended up with some money. We would have to put a lot of that aside for the DSRA, this would mean we could pay out 864 and then what we'll eventually find is that say we did have that 864, 865, we would pay that out as dividend and we would end up with less cash. And you can see, and I know I keep saying it, but it's very error pro. The only cashflow that we're looking at here is the dividend. All the other cash flows are before line 37. The entire DSRA analysis is an allocation of cash. It is not a cashflow. Now we'll tody up that little bit of effectively stress checking and now what we can build the interest income.

Okay. You can see I've kinda shortcut that a little to speed up and you can see that as we build up cash, we start to earn interest on that cash. And when we eventually end up with this all hooked up, we'll find that we often end up with the DSRA in our bank account because that's the allocated funds. We'll pay out all of the other funds as dividends and then we'll earn some interest on the DSRA funds allocated and held in a bank account. To finish up this section, what we can do is hook up the entire gigantic base account, which is our alternate cash flow statement. Okay, so we've got a bank account with some money in it, it has attracted interest.

And one more time we do need to take the interest into account when we're modeling this area of the model and that's because we started this area of the model with EBITDA and that means that interest has not been taken into account in the cash flows and so we do need to take it into account when modeling here. You can see that's made quite a big difference because the closing cash has become the opening cash and so it's had a huge difference going forward.

We've now got two cash flow statements as such. We've got this one, the debt cash flow statement, and we've got the more regular three statement model, cash flow statement on the tab before. To finish up we can compare the two and we can say once everything's hooked up, really we should find that the two ending cashs meet each other. And so we've got a nice little check there and that should say zero across the board. It doesn't, you can see some familiar numbers popping up. You can see that debt has been handled in the debt cash flow statement, but debt has not been handled in this one. And so you can see that's where the imbalance is coming in and you can see that once we start hooking up this model, things will sort themselves out and this will give us another nice integrity check.