In this article:
When you enter a loan or other funding into the Financing page of the forecast, you will see it automatically represented in three locations:
- Profit and Loss (P&L) statement
- Balance Sheet
- Cash Flow statement
The LivePlan Forecast provides the three standard (or "pro forma") financial statements that accountants and investors generally expect to see. Due to this, the format of these statements are set to show the net totals of all loans and obligations you entered; there aren’t specific line items for each loan or payment.
Additionally, to ensure proper calculation and formatting, direct edits to the financial statements are extremely limited. Any lines related to financing entries, such as your interest expenses, liabilities, or change in liabilities cannot be directly edited in any of the financial statements.
Instead, edits to financing entries are done in the Financing page of the forecast. The Financing page is also where you can find itemized breakdowns of your financing entries by loan, giving you valuable insight the totals found in the financial statements
In the Profit and Loss statement
The Profit and Loss statement will only display the interest you pay on your loans, not the principal. This is because the interest is the only portion of the loan payment that is expensable, meaning it will affect your net profit.
The Interest Expense line shows your total interest. The monthly interest you pay on your outstanding debt will amount to an annual total. Interest is calculated as a percentage of the outstanding debt. Any increase in debt will raise the interest expense, and any payments made against the debt will reduce the interest expense.
If you have entered several loans into the forecast, and they have different interest rates or varying interest rates, LivePlan will automatically calculate the total of these individual interest expenses together month by month. That total is the number you'll see in the Interest Expense line.
Reminder: Your interest expense cannot be directly input into the Profit and Loss statement. Instead, interest is set and automatically calculated in the financing entries you make in LivePlan.
In the Balance Sheet
On the balance sheet's Short-Term Debt line, you will see the cumulative total of your short-term debt. Any new loans you enter into the forecast will increase this total, and any monthly principal payments you make will decrease it.
The amounts shown in the short-term debt line are the portion of your financing scheduled to be paid back within the current 12-month period. The current 12-month period is 12 months from any month in the forecast.
(Example: the current 12-month period of Oct '24 would be Oct '24 - Sep '25)
For an more detailed explanation, please refer to the following Help Center article: What is the difference between short-term and long-term debt?
On the Long-Term Debt line of the Balance Sheet, you will see the cumulative total of your long-term debt. Any new loans you add to the forecast will increase this total, and any monthly payments you make on the principal will decrease.
The amounts shown in the long-term debt line are the portion of your financing scheduled to be paid back after the current 12-month period. If you enter a loan in your forecast that has terms of more than 12 months, LivePlan will automatically divide it into short-term and long-term amounts.
Note: Interest payments on these debts are not factored into the Balance Sheet. Instead, interest payments are shown in the Interest Expense line of Profit and Loss statement.
In the Cash Flow Statement
Note: The Cash Flow statement reports changes, not totals. So, in this statement, you'll only see increases and decreases in debt for each period, not total amounts.
The Change in Short-Term Debt line in the Cash Flow statement shows the cash coming in from funding you've received during that period, minus payments you've made. Short-term debt is the portion of financing that will be paid back within the next 12 months. For more on this subject, read What is the difference between short-term and long-term debt?
The Change in Long-Term Debt line shows the cash from funding you've received during that period, minus any payments you've made. Long-term debt is the portion of financing that will be paid back after the current 12-month period.
Interest being paid on the debt is not included on the Cash Flow statement since it is already factored into your Profit and Loss.
The example above shows how the changes in short-term and long-term debt are reflected in the cash flow statement. To simplify things, we'll assume all the loans shown here have 0% interest.
- In the first month, we add a short-term loan of $12,000. This loan will be paid back within 12 months, so it appears as a change in short-term debt only.
- In the second month, we added a new loan: $20,000, which will be paid back in 20 months. LivePlan has converted $11,000 of this loan to short-term debt since this portion will be paid back in the first 12 months. The remaining $8000 is now long-term debt. So why does that only equal $19,000 if the original loan was $20,000? That's because you have also paid on the previous month's short-term loan, and that $1,000 has been subtracted from your short-term debt. That represents a change of ($1,000), which, when added to your new $20,000 loan, becomes $19,000.
- In the third month, we add another loan of $5,000, to be paid back in 12 months. So this is new short-term debt. However, it appears to add only $4,000 to the cash flow. Why? Because we've also made two new loan payments: one on the Month 1 loan and one on the Month 2 loan. In this example, each of those payments is $1,000. So, this amount is subtracted from both the short-term and long-term debt. Since there was no new long-term debt in Month 3, the payment appears as a change of ($1,000).
As a reminder, these are not cumulative totals, which is why the line is labeled Change in Long-Term Debt. It reflects the addition (via new funding received) or subtraction (via payments) of debts in your forecast period to period.
Looking at the Cash Flow statement with annual detail, you will see the total amount of debt added in that fiscal year compared to the previous fiscal year.