11-36 A company has received a loan from a bank with certain debt covenants that require the company to maintain specific financial ratios. Discuss the potential impact of these covenants on the company's financial statements and the steps the company can take to ensure compliance. What are the consequences of violating debt covenants? How can the company negotiate with the bank to modify the covenants if necessary?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 9MC: Which method delays recognition of bad debt until the specific customer accounts receivable is...
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11-36 financial accounting

11-36
A company has received a loan from a bank with certain debt covenants
that require the company to maintain specific financial ratios. Discuss the
potential impact of these covenants on the company's financial statements
and the steps the company can take to ensure compliance. What are the
consequences of violating debt covenants? How can the company negotiate
with the bank to modify the covenants if necessary?
Transcribed Image Text:11-36 A company has received a loan from a bank with certain debt covenants that require the company to maintain specific financial ratios. Discuss the potential impact of these covenants on the company's financial statements and the steps the company can take to ensure compliance. What are the consequences of violating debt covenants? How can the company negotiate with the bank to modify the covenants if necessary?
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