Understanding a company's relationships with financial institutions and bondholders is important because
A) it can indicate the extent to which the company is leveraged.
B) it can reveal how much investors will scrutinize management.
C) it can show fraudulent transactions from special purpose entities.
D) All of the above.

Question

Quizplus · Accepted Answer

A: A very leveraged company may have more pressure to commit fraud because of debt restrictions and covenants.
B: This has to do with a company's relationship with stockholders.
C: SPE's are not usually involved in relationships with financial institutions and bondholders.

Understanding a Company's Relationships with Financial Institutions and Bondholders Is