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60-Minute Live Mini-LBOTimed attempt

Walkthrough · Lesson 3 of 5

Run the lenders in order

Show how much each lender receives and where surplus cash goes.

Working files

Net earnings and working capital are forecast.

Continue in your working file or use the starting checkpoint above.

Interest uses opening debt, so the sweep depends on cash generated after interest.

Build the live model

  1. Turn earnings into cash before repayment

    Start with after-tax earnings, add depreciation, subtract equal capex and subtract the increase in operating working capital. FY2026 free cash before repayment is $6.8461m.

  2. Pay senior before subordinated debt

    Pay the lesser of senior balance and available cash. Apply the remainder to subordinated principal. In a copy of the solved workbook, test 18% growth in L9. Both loans are retired in FY2029, and FY2030 coverage reads Debt-free. At −12% growth, the gap through exit is $14,065.86 thousand. Sponsor IRR and MOIC read N/M because no facility covers the shortfall.

    Source Model Exercise!L9, L48:P65, P68 and K79:K81

    Junior sweep = MIN(opening junior, MAX(available cash - senior sweep, 0)).

    Base case

    Priority sweep in the Port Alder solved workbook.
    Model Exercise!I47:P65Open full size · Priority sweep in the Port Alder solved workbook.

  3. Test each repayment cap

    Save an untimed copy. Change growth to 18% to trigger complete repayment. Try negative 12% to expose a cash shortfall; the financing plan needs revision where negative cash is unfunded.

  4. Repair the cash bridge after the hour

    Open a copy of the timed-layout reference at Model Exercise!I118:K129. First correct K122, which deducts net income as cash tax. Then correct the inventory sign in K123. Calculate first-year cash after each fix and describe what changes in senior debt. Check the answer on the final page of the worked rubric.

    Source Timed layout reference, Model Exercise!K122:K129. Worked Solution and Rubric, page 4.

Check the model and defense

A balanced cash rollforward with no excess repayment.

  • Reference result · See Instructions!C7:C39. The worked transaction inputs are at Model Exercise!D7:E27. Model amounts are USD thousands. Year 1 free cash
    $6.8m

    Post-tax earnings plus depreciation, less capex and change in NWC.

  • Mechanical check · Each year Repayment priority

    No junior repayment while senior principal remains after the sweep, and no ending debt below zero.

  • Reference result · Timed-layout reference, Model Exercise!K126, after both fixes FY2026 cash after both repairs
    $6.8461m

    Deduct taxes and subtract the investment in inventory.

Figures are rounded for display. Check your formulas at full precision. Displayed totals may differ slightly.
If your result differs
Both lenders receive cash while senior principal remains.

Subtract the actual senior payment before sizing the junior payment.