medium · Corporate Credit Analysis fsa
A company with $500 million inDebtand $100 million in EBITDA has a leverage of 5.0x.
If it issues $100 million in new debt to buy an asset that generates $25 million in new EBITDA, what happens to its leverage?
- Leverage remains the same at 5.0x.
- Leverage worsens (increases) to 6.0x.
- Leverage improves to 4.0x.
- Leverage improves (decreases) to 4.8x.
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