Module VI· Cash Sweep ModelingAdvanced
Question

How do you model an excess cash flow (ECF) sweep from loan documents?

Answer

Use the loan-agreement definition of ECF, not generic free cash flow. Start with EBITDA or cash flow, subtract cash taxes, interest, capex, working capital, permitted investments, mandatory amortization, and other baskets. Apply the required sweep percentage, step-downs, and de minimis thresholds. Cap repayment at eligible debt outstanding.