Why would a lender want to add a covenant specifying a maximum debt-to-total-assets ratio to a loan

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Why would a lender want to add a covenant specifying a maximum debt-to-total-assets ratio to a loan contract?

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Introduction to Financial Accounting

ISBN: 978-0133251036

11th edition

Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick

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Question Posted: Feb 20, 2015 09:08 AM

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Why would a lender want to add a covenant specifying a maximum debt-to-total-assets ratio to a loan

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Adding a loan covenant creates a possible default condition that might permit the lender to ...View the full answer

Introduction to Financial Accounting

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