You are coming into work, as a credit analyst, you learn that one of the companies in
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You are coming into work, as a credit analyst, you learn that one of the companies in your portfolio just announced they are taking a $1,000,000 goodwill write-off.
They must maintain a Total Assets to Total Liabilities ratio of 2.0 as part of their bond covenants. You are on the train and your assistant quickly sends you the following information. As you are nervously sweating to see if your company is in an event of default.
| Total Assets | 5,750,000 | ||
| Total Equity | 3,250,000 | ||
Is your company in an event of default
Not enough information is provided | ||
Yes - Covenant Violated | ||
No - Covenant not violated | ||
A write-off does not violate bond covenants |
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