Lesson 9 of 25 · 6 min

Locating the opening and closing balance

Closing is opening plus the period's arithmetic, and the two numbers are a chain, not two facts.

Opening drawn balance and closing drawn balance are not two independent readings. They are two ends of one identity. On this page the identity is written out: opening $1,847,220.00, draws and repayments $0.00, interest charged $11,343.47, closing $1,858,563.47. Adding the first three produces the fourth. If it did not, either a line is missing or a line is wrong.

closing = opening + draws − repayments + interest charged

opening: Drawn balance at the start of 1 March. Here, $1,847,220.00.
draws − repayments: Principal that moved during the period. Here, both printed as $0.00.
interest charged: The sum of the legs. Here, $11,343.47.
closing: Drawn balance at 31 March close. Here, $1,858,563.47.

Locating the two balances is a header-to-block read. They sit in the balance section, labelled opening drawn balance and closing drawn balance, not in the positions table and not in the rate schedule. Market value $6,032,795.00 is a collateral stock. It is not a loan balance. Lending value $3,277,251.25 is not a loan balance either. The loan is the drawn pair.

The opening is also a claim about the prior period. It is supposed to equal the previous statement's closing drawn balance. That chain is the next lesson's neighbour; the arithmetic on this page can only confirm that this month is internally consistent. $1,847,220.00 + $0.00 + $11,343.47 = $1,858,563.47. The identity holds. That is all one statement can say about its own two ends, and it is the first thing to recompute before any rate or position is touched.

Key terms

Opening drawn balance: What the facility owed at the start of the period, before this month's draws, repayments, or interest. Here, $1,847,220.00.
Closing drawn balance: What the facility owed at period end, after those movements. Here, $1,858,563.47.
Balance identity: Closing equals opening plus draws minus repayments plus interest. On a complete page this is an addition you can perform.

Worked example

The identity, filled in

Balance block of the Halden & Wren March statement.

Opening drawn balance: $1,847,220.00
Draws / repayments: $0.00
Interest, 1–11 March: $3,934.07
Interest, 12–31 March: $7,409.40
Interest charged: $3,934.07 + $7,409.40 = $11,343.47
Implied closing: $1,847,220.00 + $11,343.47 = $1,858,563.47
Printed closing: $1,858,563.47

Four printed lines are one addition. The closing is not a second measurement of the loan; it is the opening after the month's arithmetic.

Check yourself

Opening $1,847,220.00, draws $0.00, interest $11,343.47. What closing must the page print, and what would a printed closing of $1,858,563.00 indicate?

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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.