Two firms, A and B, are identical except for a debt covenant dealing with interest coverage (EBIT/interest expense): if the ratio is not higher than 4,the interest rate rises by0.25% for Firm Aand0.50% for Firm B

Is A or B more likely to try and have a high EBIT? Why? How could this be achieved?

IFRS allows firms to revalue their tangible assets; is Firm A or Firm B more likely to revalue its assets?