Which of the following is not an example of a debt covenant?
A) a maximum leverage ratio of 70%.
B) a maximum interest cover of 2.5 times.
C) a restriction in the amount of dividends distributed as a percentage of profit.
D) a restriction in undertaking mergers and takeovers unless approved by the lender.

Question

Quizplus · Accepted Answer

A maximum interest cover of 2.5 times is not an example of a debt covenant because it is a measure of a company's ability to meet its interest payments, rather than a restriction on the company's activities.

Which of the Following Is Not an Example of a Debt