Which of the following is NOT usually an example of restrictive debt covenants?
A) Limitations on additional borrowing
B) Constraints on disposal of non-current assets
C) Minimum levels of cash flow
D) Supplying the creditors with annual, audited financial statements

Question

Quizplus · Accepted Answer

Supplying the creditors with annual, audited financial statements is usually not an example of restrictive debt covenants. Restrictive debt covenants are limitations and requirements placed on a borrower by a lender to protect the lender's interest in the loan. Examples of restrictive debt covenants include limitations on additional borrowing, constraints on disposal of non-current assets, and minimum levels of cash flow. Supplying financial statements to the creditors is a common requirement but is not necessarily a restriction on the borrower's actions.

Which of the Following Is NOT Usually an Example of Restrictive