Microsoft PowerPoint - PoF.ppt

Characteristics 105

ƒ

Financial ratio covenants:

if a target ratio is

not met the firm is

technically in default, e.g. workin

g capital (= current A - current L)

> x, interest coverage ratio (=

earnings / interest) > x, ...

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Financing covenants:

description of the amount of additional

debt the firm may issue and the claims

to assets that this additional

debt might have in the event of default

Multi-period deterministic cash flows: FI securities - Introduction