Scenario Rollup Funding Options

Funding Options Table

Child models do not change the characteristics of the Funding Options table in the rolled up parent, as shown in the example below:

Rolled Up Parent

Account	Type	Surplus	Deficit
v2520.0.000	Term	x
v2460.0.000	Asset	x	x

Child Model

Account	Type	Surplus	Deficit
v2520.0.000	Rev	x	x
v2460.0.000	Asset		x

Order of Repayment and Funding

Strategic Modeling uses the order of repayment in the scenario rollup file when rolling up Funding Options and disregards attributes in the child model, as shown in the example below:

Rolled Up Parent

Apply Cash Surplus to...

Item	Number
Marketable Securities	1
Notes Payable	2
Long-Term Funding Asset	3

Business Unit File

Apply Cash Surplus to...

Item	Number
Notes Payable	1
Long-Term Funding Asset	2
Marketable Securities	3

Rollup Process for Funding Options Accounts

For accounts that are Funding Option surpluses or deficits, the input values forecast the maximum account output. For accounts that are not in Funding Options, the input values forecast the actual output values. For example, to repay early a term loan of $100 and there is sufficient cash, enter $100 for that account. After calculating, the output is between 0 and $100, depending on the available cash. If the term loan should not be paid early, input $100 and the output is $100.

Funding Option accounts have main accounts and maximum accounts. For example, Marketable Securities has the main account v2010.00.000 and the maximum account v2010.07.000. Maximum account output calculates based on the main account value:

If main accounts have surplus/deficit settings, maximum account outputs calculate using main account inputs.
If main accounts do not have surplus/deficit settings, maximum account outputs calculate using main account outputs.

The basic roll-up process backsolves output values from business units to calculate the rolled up input. Funding Options accounts backsolve differently:

If main accounts have surplus/deficit settings in the rolled up parent, Strategic Modeling adds all business unit maximum account outputs, backsolves the main account input, and determines the main account output using the rest of the data.
If main accounts do not have surplus/deficit settings, Strategic Modeling adds all business unit main account outputs and backsolves the main account input. The rest of the data is irrelevant.

Consider:

In business unit A, Marketable Securities (v2010) has a surplus/deficit setting. There is not enough cash to use the maximum. In business unit B, Marketable Securities (v2010) does not have a surplus/deficit setting. Business unit B runs large cash surplus. The table shows the rolled up results if Marketable Securities (v2010) has a surplus/deficit setting in the rolled up parent (SD) and if it does not (No SD).

Task	Business Unit A	Business Unit B
input (v2010.0)	100	200
output (v2010.0)	85	200
maximum (v2010.7)	100	200

Task	Cons (SD)	Cons (No SD)
input (v2010.0)	300	285
output (v2010.0)	300 (A)	285
maximum (v2010.7)	300	285 (B)

(A) This could be up to 300, depending on the rolled up cash position.

(B) This is determined by the input of v2010.00, so the maximum on these facts is not additive.

Debt accounts act like asset accounts. If the item is a term loan, the surplus/deficit setting matters.

If the item is a revolver, its accounts roll-up like assets with surplus/deficit settings, regardless of whether the revolver has a surplus/deficit setting.
If the term loan has a surplus/deficit setting, it rolls up like a revolver.
If the term loan does not have a surplus/deficit setting, it rolls up like assets with no surplus/deficit settings.

Accounts Associated with Funding Options Accounts

Funding Options accounts have accounts recording interest income or expense. For example, Marketable Securities (v2010) and Interest on Marketable Securities (v2010.05) behave in scenario rollups according to their forecast method and their associated accounts. Rolled up interest income/expense for given Funding Options accounts is generally not the sum of the business units.

Rolled Up Interest Income Example

If a business unit generates cash surplus of $100 invested in Marketable Securities and those securities earn 7%, the business unit has an interest income of $7. Roll up this business unit with one generates a large cash deficit. After rollup, if Marketable Securities has a surplus/deficit setting in the rolled up parent, the rolled up business unit shows marketable securities of 0. As long as the forecast method for interest income is a percent of Marketable Securities, interest income is zero. The interest rate is 7% in the rolled up parent.

If Marketable Securities does not have a surplus/deficit setting, the rolled up parent has $100 of Marketable Securities and $7 of interest income.

If interest income is forecast as an actual value in the rolled up parent but marketable securities has a surplus/deficit setting, Marketable Securities is zero, but interest income is $7.

Rolled Up Interest Rate Example

To get rolled up interest rates, Strategic Modeling temporarily assumes that Marketable Securities does not have a surplus/deficit setting, and adds up all child model output values for both marketable securities and interest income, and solves for the rate. This rate becomes the input for interest income. If marketable securities has a surplus/deficit setting, this rate applies to whatever output Marketable Securities uses for rolled up interest income.

Item	File	Business unit 1	Business unit 2
Mkt. sec.		300	400
Interest rate	6.57%	6%	7%
Interest inc.		18	28

Marketable Securities and Interest Income values depend on other data, but rates can be determined by adding 18 and 28 and dividing the sum by the sum of 300 and 400.