hard · Corporate Credit Analysis
Zenith Metals has a Net Debt of $2,500M and $1,200M in EBITDA. It uses $200M of its cash for a share buyback.
How does this impact its credit profile if EBITDA remains flat?
- The Net Leverage ratio increases, and the equity cushion for creditors is reduced.
- The credit profile improves as the reduced share count increases EPS.
- There is no impact because Gross Debt and EBITDA are unchanged.
- The impact is neutral because the money was 'excess' cash not needed for operations.
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