Build a Leverage Policy You Can Use
Commit to drafting a leverage policy that connects target leverage, covenant cushion, and capital returns.
Draft a leverage policy paragraph for an upcoming financing, capital-return, refinancing, or acquisition decision. Use this for a real capital-structure decision where debt level, buybacks, dividends, acquisition funding, or refinancing timing could be debated without clear guardrails. For [company/business unit], our target net leverage range is [x.x]-[x.x] through the cycle. We will preserve at least [x.x] interest or fixed-charge coverage under a [downside case] and keep [months/dollars] of liquidity. Discretionary buybacks or dividends require leverage below [x.x] and no material maturities inside [months]. Exceptions need a board-approved deleveraging path and covenant cushion above [x%]. Pending buyback request Use the policy…
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