medium · Debt Capital Markets primary-issuance-syndication

In a 'Net Leverage' test, how would the receipt of $100 million in cash from an asset sale affect the ratio, assuming the debt remains unchanged?

1. Net Leverage is entirely unaffected by movements in the company's reported cash balances
2. It would likely decrease the ratio, as the cash 'netted' against debt offsets the lost EBITDA
3. It would always increase the ratio, no matter the size of the proceeds received
4. It depends on whether the proceeds are held within a domestic account or an offshore subsidiary's

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