Mr Lewis joined Southern Cross as Chief Financial Officer after it issued a profit downgrade in May.
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Question:
Some market analysts believe that if revenues continue to deteriorate, gearing of above three times EBITDA could trigger a breach of banking covenants. ("Southern Cross CFO quit over writedown ", Darren Davidson, The Australian, 28 July 2014)?
Required:
1) After reading the above extract, use the debt hypothesis to explain the actions analysts would expect of Southern Cross.
Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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