Continental Airlines signed contracts with its major creditors (mostly banks) that require the company to maintain a

Question:

Continental Airlines signed contracts with its major creditors (mostly banks) that require the company to maintain a minimum cash balance of $600 million, a minimum shareholders’ equity balance of $972 million, and payments restricted to no more than $576 million. Discuss why the creditors impose such restrictions on Continental.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...