Which of the Following Is Not a Common Debt Covenant

question 34

Multiple Choice

Which of the following is not a common debt covenant restriction?

• A)Maintenance of a minimum level of retained earnings before dividends can be paid.
• B)Maintenance of a minimum working-capital ratio.
• C)Specification of a maximum debt-equity ratio.
• D)Specification of a minimum earnings per share.

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Definitions:

Interest Revenue

Income earned from investments, loans, or other interest-bearing financial assets.

Carrying Amount

The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium.

Gain

A financial increase resulting from a transaction that exceeds the costs or purchase prices of the assets sold, not related to the primary operations.

Long-Term

Refers to holding or affecting a period extending over a long duration, typically beyond one year.