Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

asset-coverage test

Read a random definition: reasonable support

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

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
BulbasaurNoLikeCardio
11:26
@babycat: got to keep those legs flexible so you don't pull anything, I need to get back into yoga to release and stretch out tension in my muscles. Stretching is where I fail the most with fitness
11:26
This song came out today and I think I legit have listened to it like 50
11:26
Times already
1a2b3c4d26z
11:26
Need to stretch more
1a2b3c4d26z
11:27
Run this morning felt like legs were made of goop
glovediedthisishismom
11:27
a secret home remedy for chapped lips is to lick them. your saliva will moisten the lips and relieve the chapping
1a2b3c4d26z
11:27
Sometimes I think I write like rorschach from watchmen
11:28
@glovediedthisishismom: just bite your lip,. gives good brain feel when peelin the dry skin
babycat
11:28
yeah it’s insane how much better hip flexor stretches can make you feel sometimes
11:28
Probably the most important long term mobility thing you can do
1a2b3c4d26z
11:28
Pigeon stretch GOAT
1a2b3c4d26z
11:29
Stretching was probably the biggest factor in becoming elite in my sport tbh
1a2b3c4d26z
11:29
well mobility in general
m10
11:29
Nah you wanna be wound up tight like a clock. All your parts working in synchronization, never missing a second.
BulbasaurNoLikeCardio
11:30
When I get home I think I will pull up a youtube yoga video and lay out the mat by the fireplace now, feeling guilty I haven't been stretching properly
1a2b3c4d26z
11:30
tighter you are, more potential energy you have. Your body is a spring. It's just physics
m10
11:30
Exactly.
JumpySubsequentDolphin
11:30
yoga classes stress me out
WorthlessAttractiveZombie
11:31
W&L put their scholarship info on the portal for those who were admitted 11/12
m10
11:31
Gotta always be ready to release that energy. Like if I am in a fight at the bar, I just gotta bust out a couple punches. No stretching.
JumpySubsequentDolphin
11:31
the instructor will be like "forget all of the things that youre stressing about" which reminds me of all of the things im stressing about
BulbasaurNoLikeCardio
11:32
I am too competitive to do yoga classes with other people. Try to stretch better or further then hurt myself lmao I am beyond competitive in anything physical.
babycat
11:32
if you guys all pay me to be your lsat tutor I can afford to do Pilates classes
JumpySubsequentDolphin
11:32
hot yoga was fun
JumpySubsequentDolphin
11:32
i loved barre and pilates when i did them together
m10
11:33
Here's an article from Testosterone nation for all you men out there on why stretching is bullshit. https://archive.t-nation.com/training/stretching-is-b-s/
snow
11:36
M so close to crashing out
BulbasaurNoLikeCardio
11:36
@babycat: If the person I am mentoring decides to listen to my advice instead of just discussing my advice I will pay you to tutor her. You seem like a smart, good and well put together person that she can probably learn well from.
LSD+ is ad-free, with DMs, discounts, case briefs & more.