Covenants in loan agreement

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Reference no: EM131446091

Discuss reasons why banks might choose to include the following covenants in a loan agreement:

a. Cash dividends cannot exceed 60 percent of pretax income

b. Interim financial statements must be provided quarterly

c. Inventory turnover must be greater than five times annually

d. Capital expenditures may not exceed $5 million annually

Reference no: EM131446091

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