medium · Corporate Credit Analysis credit-metrics
Under a standard 'Net Debt' framework, what happens if a firm uses $50 million of cash to pay down $50 million of debt?
- Both gross leverage and net leverage decrease.
- Gross leverage decreases while net leverage remains the same.
- Gross leverage remains the same while net leverage decreases.
- Net leverage increases because the firm's liquidity cushion has been reduced.
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