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Debt contracts contain covenants that require the borrower to maintain specific financial ratios, such as a minimum current ratio and interest coverage ratio, and a

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Debt contracts contain covenants that require the borrower to maintain specific financial ratios, such as a minimum current ratio and interest coverage ratio, and a maximum debt-to-equity ratio. Failure to maintain the specified financial ratio levels is considered a covenant violation. Dabong Tao ob som Required: blooliselt Given such debt covenants, explain why more conservative accounting earnings can better protect lenders' interests

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