6. Identify which of the following loan covenants are affirmative and which are negative covenants: a. Nige Trading Corporation must pay no dividends to its shareholders above $3 per share without express lender approval. b. HoneySmith Company pledges to fully insure its production line equipment against loss due to fire, theft, or adverse weather. c. Soft-Tech Industries cannot take on new debt without notifying its principal lend- ing institution first. d. PennCost Manufacturing must file comprehensive financial statements each month with its principal bank. e. Dolbe King Company must secure lender approval prior to increasing its stock of fixed assets. f. Crestwin Service Industries must keep a minimum current (liquidity) ratio of 1.5x under the terms of its loan agreement. g. Dew Dairy Products is considering approaching Selwin Farm Transport Company about a possible merger but must first receive lender approval.

6. Identify which of the following loan covenants are affirmative and which are negative covenants: a. Nige Trading Corporation must pay no dividends to its shareholders above $3 per share without express lender approval. b. HoneySmith Company pledges to fully insure its production line equipment against loss due to fire, theft, or adverse weather. c. Soft-Tech Industries cannot take on new debt without notifying its principal lend- ing institution first. d. PennCost Manufacturing must file comprehensive financial statements each month with its principal bank. e. Dolbe King Company must secure lender approval prior to increasing its stock of fixed assets. f. Crestwin Service Industries must keep a minimum current (liquidity) ratio of 1.5x under the terms of its loan agreement. g. Dew Dairy Products is considering approaching Selwin Farm Transport Company about a possible merger but must first receive lender approval.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...

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