A key difference between a positive covenant and a negative covenant is,for a:
A) positive covenant, a company must comply with restrictions on its financial structure.
B) negative covenant, a company must maintain a minimum level of working capital.
C) negative covenant, a company must provide annual audited financial statements.
D) positive covenant, a company must maintain a minimum debt to gross cash flow ratio.

Question

Quizplus · Accepted Answer

A positive covenant requires a company to take certain actions, such as maintaining a minimum debt to gross cash flow ratio, while a negative covenant restricts certain actions, like not exceeding a certain level of debt.

A Key Difference Between a Positive Covenant and a Negative