In: Finance
At the end of the year ABC Company reported long-term debt of $3,974 million and the current portion of long-term debt of $219 million. At the end of the prior year they reported long-term debt of $3,503 million and the current portion of long-term debt of $268 million. How much (in $ millions) did the company receive from issuing new long-term debt or pay off any existing debt? If they issued debt, enter your answer as a positive number; if they repaid debt, be certain to place a negative sign in front of your answer. (please show all steps)
Solution :
As per the information given in the question we have
Long term debt at the beginning of the year = $ 3,503 million ;
Current Portion of the Long term debt at the beginning of the year = $ 268 million
Thus the Non Current Portion of the Long term debt at the beginning of the year = $ 3,503 million - $ 268 million
= $ 3,235 million
Long term debt at the end of the year = $ 3,974 million
Current Portion of the Long term debt at the end of the year = $ 219 million
Thus the Non Current Portion of the Long term debt at the end of the year = $ 3,974 million - $ 219 million
= $ 3,755 million
Calculation of changes in current portion of long term debt :
= Current Portion of the Long term debt at the end of the year - Current Portion of the Long term debt at the beginning of the year
= $ 219 million - $ 268 million
= - $ 49 Milion
Thus the current portion of the Long Term Debt that was repaid during the year = $ 49 Million
Calculation of changes in Non current portion of long term debt :
= Non Current Portion of the Long term debt at the end of the year – Non Current Portion of the Long term debt at the beginning of the year
= $ 3,755 million - $ 3,235 million
= $ 520 Milion
Thus the Non current portion of the Long Term Debt that was issued during the year = $ 520 Million
Thus we have
Net change in the Long Term debt during the year = Repayment of current portion of long term debt + Issue of Non – Current portion of long term debt
= - $ 49 million + 590 million
= $ 471 million
Thus the Long term debt issued during the Year = $ 471 million
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution in a tabular format.