Which of the Following Is NOT an Example of a Positive

question 84

Multiple Choice

Which of the following is NOT an example of a positive debt covenant?

• A) The company has to maintain a minimum level of working capital.
• B) The company is restricted from doing mergers and acquisitions.
• C) The company has to supply periodic cash flow statements to the lender.
• D) The company has to supply annual audited statements to the lender.

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Definitions:

Creditors' Risk

The risk that debtors will fail to make payments on debts owed, affecting creditors' financial positions.

Nonpayment

The failure to fulfill a financial obligation, such as not paying bills, debts, or invoices when they are due.

Fiscal Year

A 12-month period used for accounting purposes and preparing financial statements, which may not necessarily align with the calendar year.

Stockholder's Equity

The ownership interest of shareholders in the assets of a corporation, represented by their shares of the company's stock.