How do accounting accrual adjustments affect covenants

Assignment Help Accounting Basics
Reference no: EM132913514

Question - Companies sometimes face binding debt covenants. Mangers have historically used various means to improve their reported numbers to avoid binding covenants, including adjusting accounting accruals, making "real" operating changes such as decreasing certain discretionary expenses or cutting back on capital expenditures. How do accounting accrual adjustments affect covenants that require minimums for retained earnings or certain ratios (such as the current ratio)? Are those effects permanent?

Reference no: EM132913514

Questions Cloud

Difference between protecting the natural world : What is the difference between protecting the natural world because we humans and valuable and because animals and valuable?
What is the capital value : What is the capital value as at 1st January for year 3 if it is discovered at that point in time that the expected receipt for year 4 will be €1,000
Explain why financial statements dont work : Explain why financial statements dont work for digital companies' such as Facebook. Do these financial statements meet their objective of providing relevant
Research and comment on the companies competition : Describe any business/operating units. Research and comment on the companies competition. What do they do and how do they compare to your chosen company?
How do accounting accrual adjustments affect covenants : How do accounting accrual adjustments affect covenants that require minimums for retained earnings or certain ratios (such as the current ratio)
Role in enhancing non-financial/extended reporting : Discuss to what extent can, or should, accountants play a role in enhancing non-financial/extended reporting
Research the culture of a country of choice : Research the culture of a country of your choice. Describe the key cultural differences between the US and your chosen country.
What is the purpose of preparing a bank reconciliation : What is the purpose of preparing a bank reconciliation? How often should one be prepared? Who should not prepare one? Why
Readily identifiable ethical issues for your decision : What are the readily identifiable ethical issues for your decision and What would you do

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine BBBC cost of goods sold

Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. Determine BBBC's 20x4 cost of goods sold

  Classifications within net income

Discuss how the authoritative literature addresses comprehensive income. Define three classifications within net income and give an example of each.

  Calculate the cost of credit

Php 5,000,000 but with the interest of Php500,000 which will be deducted upon receipt of cash loan. Calculate the cost of credit

  The manager of healthy snack division of mulchan industries

the manager of healthy snack division of mulchan industries is evaluated on her divisions return on investment and

  How do you compute the compounded annually

How do you compute the compounded annually, How much will Juan and Rachel need to deposit today to achieve their goal

  What is Pieper trust accounting income

The trustee of the Pieper Trust can distribute any amount of accounting income and corpus to the trust's beneficiaries, What is Pieper trust accounting income

  How much the Gerrold must include in his gross income

Gerrold received $120,000 for damages to his professional reputation, How much the Gerrold must include in his gross income as a damage award

  Journalize for frenchvanilla the entry declaring the cash

On December 15, Frenchvanilla declared the annual cash dividend on its 5% preferred stock. Journalize for Frenchvanilla the entry declaring the cash

  Determine the total product cost and average cost per unit

Determine the total product cost and the average cost per unit of the inventory produced

  Determine equivalent units in process for direct materials

Determine the equivalent units in process for direct materials and conversion costs, assuming there was no beginning inventory

  What is omega after-tax wacc

It has also issued long-term bonds at an interest rate of 7 percent. It pays tax at a marginal rate of 35 percent.a. What is Omega's after-tax WACC?

  How liquid you think the following assets are likely to be

State how liquid you think the following assets are likely to be 10-year Government bonds. $10,000 in a day-today bank account.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd