In financial modeling, negative cash can occur on the balance sheet if there is no line of credit or “revolver” built into the model. This is not necessarily a problem; however, it is generally considered best practice to model in a line of credit that is automatically used to fund a potentially negative cash balance. CFI’s LBO modeling course covers how to do this, step by step.
CFI is the official global provider of financial modeling and valuation analyst FMVA Designation. CFI's mission is to help anyone become a world-class financial analyst and has a wide range of resources to help you along the way. In order to become a great financial analyst, below are some additional questions and answers for you to explore further:
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