A Company Has a Debt Covenant in Place That Limits

question 46

Multiple Choice

A company has a debt covenant in place that limits the amount it can borrow to 50% of its tangible assets.If the company's actual value for that ratio is approaching violation of this debt covenant,consistent with PAT,management would try to relax the constraint by:

• A) Switching from straight-line depreciation to reducing balance method.
• B) Increasing allowance for doubtful debts from 5% to 10%.
• C) Increasing provision for warranty expenses.
• D) Revaluing assets upwards.
• E) All of the given Answers.

---

Definitions:

Bundling

Practice of selling two or more products as a package.

Price Discrimination

The strategy of selling the same product at different prices to different segments of consumers, based on their willingness to pay.

Combination Meal

A set meal at a restaurant that includes multiple items at a fixed total price, often providing a discount compared to purchasing items separately.

Student ID

A unique identifier assigned to students by educational institutions for tracking and administrative purposes.