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Relationship between accrual adjustments and covenants

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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. What is the relationship between accounting accrual adjustments and covenants?

Reference no: EM132896370

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