Accounting Theory

You have been recently appointed as a lending officer in a large bank. The bank is concerned about lending in the current economic environment, where there has been an economic downturn. Prepare a report outlining what agency problems the bank should be concerned with and how debt covenants in debt agreements can be used to reduce those problems. Also explain how accounting numbers can be used to assist in the process?

Required: Using the reference materials available on the internet and text book, research the topic and prepare a report for the bank fully referenced up to 500 words.

Note: This references to Financial Accounting