covenants — Corporate Credit Analysis Practice Questions

61 free Corporate Credit Analysis questions on covenants: 13 easy, 39 medium, and 9 hard, every one exam-realistic and fully explained once you sign in. This is the fastest way to turn covenants from a weakness into a scoring area — drill it in 10-question reps with immediate feedback.

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1. A credit agreement requires a borrower to maintain a Net Lev… — What type of covenant is this?
2. Ironclad Corp has a credit agreement that requires the firm… — This is an example of what type of covenant?
3. In a well-known creditor-on-creditor move, a company transfers its valuable trademarks and brands to an 'unres
4. Serta Simmons Bedding executed a transaction where 65% of it… — What is this tactic called?
5. What is the primary implication for creditors of the parent company?
6. If the company utilizes the full basket to fund an acquisition, what is the minimum EBITDA the acquired compan
7. What is the total capacity in the basket for a dividend payment?
8. If the company pays a $40M dividend at the end of Year 1, what is the remaining basket capacity?
9. What is the maximum debt Apex can incur?
10. If the sponsor injects $30M in cash as a cure, how is the covenant test recalculated?
11. What is the primary impact on Horizon's existing senior unsecured bondholders?
12. In the context of 'Liability Management', what occurs during an 'Uptiering' transaction?
13. If cumulative Net Income is $200M and they have already paid $30M in dividends, what is the remaining capacity
14. If the borrower draws $40M to fund seasonal inventory, what is the immediate credit implication?
15. How much additional unsecured debt can the company issue for a dividend recapitalization?
16. Which type of covenant is being described?
17. A sponsor contributes $50M of new equity to Titan Corp to fi… — What is this right called?
18. If the credit agreement allows an 'EBITDA add-back' equity cure, how much equity must the sponsor contribute t
19. What is the resulting covenant EBITDA for testing purposes?
20. If the agreement uses the standard 'EBITDA add-back' approach, how does this affect the covenant test?
21. If the agreement includes a '50 bp sunset after 6 months', what does this imply?
22. What is the basket capacity at the start of Year 2?
23. Which of the following is true?
24. If they have already paid $60M in dividends, what is the remaining capacity for dividends?
25. What is the minimum equity contribution required from the sponsor to cure the breach?
26. What is the primary objective of a 'Cash Sweep' provision in a credit agreement?
27. Which of the following is considered an 'Affirmative Covenant'?
28. A 'Springing' covenant in a revolving credit facility is generally seen as providing less protection than a st
29. If a Private Equity sponsor sells its 60% stake to a strategic competitor, what mandatory action is triggered
30. A 'Covenant-Lite' loan is most accurately described by which of the following statements?