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2. Companies routinely face binding debt covenants. Managers have historically used various means to improve reported financial numbers to avoid violating such covenants, including adjusting
2. Companies routinely face binding debt covenants. Managers have historically used various means to improve reported financial numbers to avoid violating such covenants, including adjusting accounting accruals and making real operating changes such that decreasing certain discretionary expenses or cutting back on capital expenditures. Required: 8. In what weys can managers affect acchals as a means of meeting debt covenant restrictions? What are the possible consequehtes of taking such actions? b. In what ways can managers make real operating decisions as a means of ineeting debt covenant restrictions? What are the possible consequenices of takitig sueh actions? 2. Companies routinely face binding debt covenants. Managers have historically used various means to improve reported financial numbers to avoid violating such covenants, including adjusting accounting accruals and making real operating changes such that decreasing certain discretionary expenses or cutting back on capital expenditures. Required: 8. In what weys can managers affect acchals as a means of meeting debt covenant restrictions? What are the possible consequehtes of taking such actions? b. In what ways can managers make real operating decisions as a means of ineeting debt covenant restrictions? What are the possible consequenices of takitig sueh actions
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