Lesson 25 of 25 · 7 min
Why the schedule is recomputed every month
Last month's 54.32 percent is a photograph. The next close takes another, even if nobody rewrites a rate.
A schedule is a table of rates, and the table can sit still for a year. The operative schedule is that table applied to this month's units, prices and classifications. Three of those four inputs can move without a credit committee. Prices move every session. Unit counts move when something is bought or sold. Classifications move when a test is failed or a cap is breached. The blend is the output of all four, so it is recomputed because its inputs are live.
Lesson 19's February-to-March walk is the quiet case. Rates held still. Units held still. Prices moved. Market value went from $5,947,680 to $6,032,795. Lending value went from $3,235,668 to $3,277,251.25. The blend went from 54.40 percent to 54.32 percent, because the low-advance name appreciated a little more than the rest. Nobody rewrote the table. The photograph changed.
The loud cases are the ones this track already ran. A 37 percent Calder fall raised the blend to 56.78 percent and cut lending value by $238,280.65. A Calder zero cut lending value by $644,001.75 and left stated capacity untouched. A Meridian 63 percent overwrite added $238,979 and lifted the blend to 58.29 percent. Each of those is a month that can arrive without a new agreement, and each of them makes last month's 54.32 percent the wrong caption.
The facility limit does not save you from the recompute. On this book the limit is binding, so several of those months leave stated capacity at $2,400,000. They still change the surplus, the blend, the two concentration shares, and the distance to the day the limit stops being the smaller number. A line that looks unchanged on the draw page can be a different collateral object by the next statement date.
The table can be annual. The application is daily in the lender's system and monthly on yours. The month is already a coarsening.
Key terms
- Operative schedule
- This month's rates applied to this month's holdings. A live object, even when the published table is not.
- Quiet month
- A period in which rates and units hold still and only prices move. February to March in lesson 19.
- Surplus distance
- How much lending value can fall before stated capacity leaves the facility limit. $877,251.25 on the March open.
Worked example
One caption, four months that retire it
Starting caption: March's 54.32 percent on $3,277,251.25. Four already-computed variants.
- February, quiet prices
- 54.40%
- Calder down 37 percent
- 56.78%
- Calder reclassified to 0%
- 43.65%
- Meridian at 63%
- 58.29%
- What the four share
- A new photograph
Rates unchanged.
Lending value $3,038,970.60.
Lending value $2,633,249.50; capacity still $2,400,000.
Delta $238,979.
None of them reuse 54.32 percent as an input.
The caption is dated. Reusing it is how a limit-bound book talks itself into believing the month did not happen.
Check yourself
February blended to 54.40 percent and March to 54.32 percent with the same five rates. Why is the schedule still recomputed, and what later event on this book would move the blend by more than ten points without changing the stated $2,400,000 capacity?
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Educational only. Nothing in this lesson is investment, legal or tax advice, or a recommendation to enter into any transaction. Figures are illustrative and computed from the inputs stated in the lesson.