The Purpose of the Restrictive Debt Covenant That Requires Maintaining

Multiple Choice

The purpose of the restrictive debt covenant that requires maintaining a minimum level of net working capital is to

A) ensure a cash shortage does not cause an inability to meet current obligations.
B) prevent liquidation of assets through large salary increases of key employees.
C) protect the lender by controlling the risk and marketability of the borrower's security investment alternatives.
D) limit the amount of fixed-payment obligations.