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