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LSDefine

Simple English definitions for legal terms

asset-coverage test

Read a random definition: common area

A quick definition of asset-coverage test:

Asset-Coverage Test: A rule that says a company can only borrow more money if they have enough assets (like buildings or equipment) to cover their debts. The test sets a minimum ratio of assets to debt that the company must maintain in order to borrow more money.

A more thorough explanation:

An asset-coverage test is a restriction in a bond-indenture that allows a company to borrow more money only if the ratio of its assets to debt does not fall below a certain minimum. This test is used to ensure that a company has enough assets to cover its debts and can continue to pay its creditors.

Let's say a company has $10 million in assets and $5 million in long-term debt. The asset-coverage ratio would be 2:1 ($10 million divided by $5 million). If the bond-indenture requires a minimum asset-coverage ratio of 1.5:1, the company would be allowed to borrow more money as long as its assets remain above $7.5 million (1.5 times its long-term debt).

Another example would be a company that has $20 million in assets and $10 million in long-term debt. The asset-coverage ratio would be 2:1 ($20 million divided by $10 million). If the bond-indenture requires a minimum asset-coverage ratio of 2:1, the company would not be allowed to borrow more money until it increases its assets or reduces its debt.

These examples illustrate how the asset-coverage test works. It ensures that a company has enough assets to cover its debts and can continue to pay its creditors. If a company's asset-coverage ratio falls below the minimum required by the bond-indenture, it may be a sign that the company is in financial trouble and may not be able to meet its obligations.

asset-based financing | asset-depreciation range

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WorthlessAttractiveZombie
9:35
Jack's just tweaking on LSD no biggie
to be fair this accurately represents my mental state
election day psychosis coming in hot (fordham)
usc pls pull through .....
i literally just need one A so i can relax before my ED decision
WorthlessAttractiveZombie
9:38
oh that's right USC might release
soapy
9:43
USC still has not looked at my app
WorthlessAttractiveZombie
9:43
when did you submit soapy?
soapy
9:44
10/16
WorthlessAttractiveZombie
9:44
to be fair it took them almost 2 months for me to go under review
soapy
9:44
Feelin a bit stressed, as I've got no date change for Michigan either despite applying 10/7
WorthlessAttractiveZombie
9:45
I have not had a date change either for Mich but I've seen people get in without one so who knows
I applied 9/25 to like 6 schools and some (Houston) have no date change yet so dw
soapy
9:46
But do people get in without addresses going long?
WorthlessAttractiveZombie
9:46
it's tough to tell because a lot of people type out their addresses long to begin with
soapy
9:46
Ah. I didn't. Looking back, my Mich supplement kind of sucks, so there's that
Mich overrated (Dean Z please let me in even tho i didnt apply and I am below both 25ths)
ClassyPleasantHeron
10:01
The "date changes" at Michigan really don't mean anything. We had to do them in undergrad admissions whenever a Georgia applicant picked the country instead of the state, because we'd have to remove the TOEFL requirement and reassign the application from the international application readers.
soapy
10:06
Classy, does that mean they may look at your application, and that look doesn't necessarily trigger any date change?
1a2b3c4d26z
10:06
Man
1a2b3c4d26z
10:07
Walkin to the bus
1a2b3c4d26z
10:07
What a good day to get into law school
ClassyPleasantHeron
10:11
@soapy: I don't know for sure about the law school. For undergrad, once the application is complete, it's assigned to a reader the following Monday. If we had to make any changes, it's because a reader saw something that needed to be changed and the application needed to be re-read after that change.
soapy
10:12
Ahh, got it. Thank you for the insight!
ClassyPleasantHeron
10:14
You're welcome. FWIW, I have no idea what's up with the address changes. We didn't have to do any of that, except for the Georgia state vs country kinds of things.
soapy
10:15
I've heard it theorized that some schools will change the address from "St." --> "Street" as they prepare to send out admissions packets. That's the rumor, anyways.
i think it just indicates a change in status like under review or stages of review
my stanford address went long as soon as it was marked complete lmao
soapy
10:25
I saw some Reddit adcom say that they can see any time we refresh the status checker; I wonder if it's a red flag if an applicant's checked it like 50 times in a day?
soapy
10:25
Also, can we send another LoR to a school that we've already applied to?
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