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what are "debt covenants"? how are debt covenants disclosed in the financial statements?

what are "debt covenants"? how are debt covenants disclosed in the financial statements?

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Answer #1

Debt Convenants is a contract between a organisation and the creditor that is the organisation will work with some rules which will be set by the Creditors.

It will be a benefit for both the Creditors and Organisation,

Creditor-Debt Restrictions will protect the Creditor by forbiding some actions taken by organisation.

Organisation-Cost of Borrowing will be Low than Other Option of Borrowing because this type of debt comes with certain Restrictions.

It will Reported in Liabilities Side of a Balance Sheet.

If Short term then under Current Liability.

If Long term then under Long term Liability

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