Debt covenant violations have a significant impact on a company since they can affect ________.
A)the ability of the entity to function as a going concern
B)overall liability relationships in the financial statements
C)the presentation of equity in the financial statements
D)how loan agreements should be structured

Question

Quizplus · Accepted Answer

Debt covenant violations can lead to default on loans and other financial obligations, which can negatively impact the company's ability to generate revenue and continue operating as a going concern. This can also impact the company's credit rating and ability to secure future loans or investments.

Debt Covenant Violations Have a Significant Impact on a Company