medium · Private Equity advanced-lbo
In the calculation of Net Debt for an LBO exit, why is 'Restricted Cash' usually excluded from the cash subtraction?
- Because it is not 'free' cash available to repay debt or distribute to shareholders at the sponsor's discretion.
- Because GAAP rules require restricted cash to always be classified and reported as a long-term intangible fixed asset.
- Because restricted cash is typically already netted out entirely against accounts payable balances.
- Because restricted cash generally carries a materially higher stated interest rate than the Revolver.
Sign up free to see the explanation and track your rank →
More Private Equity advanced-lbo practice
- If Year 1 Excess Cash Flow is $40M, how much is used to pay down the debt?
- If the actual SOFR rate drops to 0.50%, what is the total interest rate paid by the borrow
- What is the maximum debt allowed if the leverage covenant is set at 5.0x Covenant EBITDA?
- Which option has the lower weighted average cost of debt?
- What is the sponsor's required equity contribution?
- If no principal is repaid, what is the outstanding principal balance at the end of the fir
- If EBITDA is $100M and the debt raised is $600M, what is the total equity check?
- An LBO analysis estimates a company can support $400m of deb… — What is the minimum LTM EB