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Author Question: The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated ... (Read 44 times)

CQXA

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on: Jul 11, 2018
The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated to the original loan is to ________.
 
  A) maintain a minimum level of liquidity
  B) limit the amount of fixed-payment obligations
  C) ensure a long-run cash shortage does not cause an inability to meet current obligations
  D) protect the original lender in the priority of claims during liquidation

Question 2

The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to ________.
 
  A) assure the lender that additional borrowing is constrained
  B) limit the amount of fixed-payment obligations
  C) limit the realization of current assets to cash
  D) limit the payment of annual cash dividends


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daiying98

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Reply #1 on: Jul 11, 2018
Answer to Question 1

D

Answer to Question 2

C


CQXA

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Reply 2 on: Jul 11, 2018
Great answer, keep it coming :)

cam1229

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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