Circular reference

A calculation that depends on itself, which in financial models arises because interest depends on debt, debt depends on the cash shortfall, and the shortfall depends on interest.

Spreadsheets resolve it with iterative calculation, which converges in most cases. Occasionally it doesn't, and the model is left unstable and hard to audit.

Alternatively, use the opening debt balance for the interest calculation. That's transparent and slightly inaccurate. Or break the loop with an explicit switch.

Instability in a model is worse than a small approximation.