Debt Schedule Calculator

Worked example: year one of a 400 debt schedule

One year of mechanics with round numbers, in the order a model computes them.

Interest absorbed more than half the year's cash flow before a dollar of principal moved. That is why entry leverage and the interest rate matter more to the equity story than the sweep percentage does.

Method

A debt schedule tracks how a borrowing balance moves each year. Interest accrues on the opening balance, a fixed mandatory amortization retires a slice of the original principal, and any remaining free cash flow sweeps against the balance according to the credit agreement. The closing balance becomes next year's opening balance, which is why the schedule has to be built in sequence.

Enter the opening debt, an interest rate, mandatory amortization as a percentage of the original principal, cash flow available before debt service, a growth rate for that cash flow, and the share of residual cash the sweep captures. The table shows interest, mandatory payment, sweep payment, and closing balance for every year, plus cumulative paydown. Total interest and closing leverage are summarized so you can see the trade-off between paying down debt and holding cash.

1. 1. Set the opening balance

   Total funded debt at close, before any repayment.

2. 2. Apply interest on the opening balance

   Interest consumes cash before any principal is repaid.

3. 3. Deduct mandatory amortization

   A fixed percentage of the original principal, due regardless of performance.

4. 4. Sweep the residual cash

   Apply the agreed share of remaining free cash flow against the balance.

5. 5. Roll the balance forward

   Closing debt becomes next year's opening debt, then repeat.

Debt paydown is one of the three levers of equity value creation, alongside EBITDA growth and multiple change, and it is the one most directly under management control. Every dollar of debt retired converts into a dollar of equity value at constant enterprise value, which is why sponsors watch the sweep closely in the first two years. A few mechanics matter when you move from this simplified schedule to a real one. Term loan B tranches typically carry light mandatory amortization, often one percent of principal a year, with the balance due at maturity, while revolvers are drawn and repaid rather than amortized. Sweep percentages usually step down as leverage falls, so a credit agreement might sweep half of excess cash flow above a leverage threshold and none below it. Interest is often floating, set as a base rate plus a spread, which means a schedule built at a fixed rate understates the risk when rates move. Cash interest also differs from total interest when a tranche pays in kind, since PIK interest capitalizes into the balance rather than consuming cash. Finally, the covenant view matters as much as the balance: a schedule that shows the balance falling but the interest coverage ratio tightening is telling you the deal is fragile even though the debt is shrinking.

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