## 31 Long Term Debt Continues

So now how are you going to predict the end of beta long term debt. One way to do this would be to take an average of the long term and beat it. But I would not do that. Instead I would rather take an average of whatever watering they’re doing. So usually people assume no watering and take that at zero. But I am your own personal view whether you want to take it at zero or you want to take an average of the last year. What do we. For me I feel that you cannot predict that that they’re not going to borrow anything for the last for the next five years. If they have heavily borrowed in the previous year. So if what do you think that concept in mind I am calculating the borrowings as the average of the previous year’s borrowings and now I have the end of the debt as well I need to calculate the interest expense on long term. And how am I going to do that. If you remember in the income statement at the top we are not included the values for income status for interest expense and interest income. We are going to do that out now when we come here and made all these schedules we come to the income interest expense for long term debt. So let us look at the annual report away on so we have a note for that over here. All you have to do is just go to the balance sheet look at that. OK. I’ll show it back to you. So you go to the balance sheet and you go to the debt and you see that OK. Debt is not number 15. So I need to go to both 15 and you go and you search note 15 and you get that. So to calculate to be attached calculate the interest will calculate that the weighted average interest rate. So we know what is outstanding amounts for that particular amount of it and what is the interest rate on that debt. So this then company has twenty five thousand four hundred ninety eight in non-current debt form in non-current debt from notes and bonds 1000 from bank 68 from other financial indebtedness and 115 from obligations under finance leaders. And these are the interest rate for the same for financial indebtedness and obligations under finance. It’s for loans from banks and other financial in that is an obligation on the Finance leader these three attacks 2.8 zero point two and four point seven respectively. That is exactly what I have done over 0 2 5 4 9 8 plus thousand into zero point zero to it plus zero point two percent was from other financial in that method sixty eight into zero point zero zero two point last hundred and fifteen 2 0 1 0 4 7. This is the interest expense which I’m assuming is going to be same because I’m assuming no repayment in the next few years in the next five year and once you have the interest expense and you have the debt you can easily calculate the interest rate as interest expense divided by the end of period long term debt. And take it at a percentage. At close it’s close to 2 percent. So empire interest is being paid in cash. Or are you saying one good 800 percent but I have included this concept of B.A. because I want to explain it to you. What does it mean to me it’s paid in kind. Means you are not paying interest in cash you’re paying it in kind. So although your interest is being paid it would not make an entry to your cash flow statement because you’re not getting cash in and you’re getting kind of payment and that is why it is very important for you to understand that when a company being investors need to understand that whether they invested entirely in cash or in kind or in this case than they invested being paid in cash or a veto over a year. But just to make sure you have to remember that such thing might happen where interest some of the investors being paid in kind and you have to take care that such it does not flow to the cash flow statement. So we have the long term debt. Now it’s in 285. So what I’m going to do is I’m just going to go to the balance sheet and I’m going to enter the long term debt adds. Okay. So you see there is some sing off beat about here. And to understand what it all read about I am going to click on this. I either went to pest control backspace to understand that it is being taken from a decent bottling instead of end of Peter who had made a mistake or instead of a controlled backspace or I can also do takes precedence a trace of sequence or dependence that we have seen go understand where that coming from. However over a year we do not need that. We have to only change a number by one then we get this and this should be accurately for students and not a subsequent at all the mistake with us at hand. Now you understood the point. So all we need now in the balance sheet for assets and liabilities cash and short term debt and can point long term debt which you will get everything through the cash flow statement and this equity is something that you will make which is not a difficult path will make it easily. And this is a balanced check which is nothing but to check with assets minus liabilities minus equity is equal to zero. So it is it will come too close to zero point Rito will downgrade off to its total assets minus liabilities minus equities and wandered off to three digits which is forty three digit 3 0 0 0 a year. Because it’s already balance its historical but for the future that it won’t be zero it will behave by a number that you can see as of now but it is 0 for the previous two and this becomes zero your financial model is balanced and you can post it and say that you have finished the financial model however now let us move on to understand the cash flow statement and the short term debt that they’re going to use. But first we need to understand the cash flow statement we we’re done with the balance sheet. Now it’s time to understand this is something which is left will put it after the cash flow statement or rather will first to the equity schedule because it’s an easy schedule it will finish fast than way to do the equity schedule now after which I’m going to put it on with the actual statement.