Which of the Following Is an Example of an Appropriate

question 57

Multiple Choice

Which of the following is an example of an appropriate loan covenant?

• A)The firm must increase its debt ratio by at least 10 percent.
• B)The firm must reduce its total asset turnover by 10 percent.
• C)The firm must purchase an insurance policy on a key employee.
• D)All of these are examples of an appropriate loan covenant.

---

Definitions:

Price Index

A statistical measurement that tracks changes in the price level of a basket of goods and services over time.

Inventories

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

GDP

The total value of all end products and services created within a country's borders during a certain time frame defines Gross Domestic Product.

Production

The process of creating goods or services by combining labor, capital, and raw materials in order to meet consumer demand.