Chopin Ltd Has a Debt Contract and Is Close to Violating

question 56

Multiple Choice

Chopin Ltd has a debt contract and is close to violating the return on equity ratio as stipulated in the debt agreement.What is the most appropriate action to take?

• A) Negotiate a loan to increase cash balance.
• B) Accelerate collection of receivables.
• C) Negotiate to prepay long-term debt.
• D) Revalue a class of asset.
• E) None of the given answers.

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Definitions:

Res Ipsa Loquitur

A legal principle that allows for the presumption of negligence in a lawsuit based on the nature of the accident, even without direct evidence of the defendant's fault.

Lack of Due Care

The failure to act with the level of care that someone of ordinary prudence would have exercised under the same circumstances, leading to negligence.

Judge and Jury

Refers to the two distinct roles in a trial, where the judge oversees legal procedures, and the jury determines facts and delivers a verdict based on evidence.

Shifting Burden of Proof

A legal principle where the duty to prove or disprove a fact shifts from one party to another during the course of a legal proceeding.