10
The Macrae RISK Reduction Rules®
Central case, Trader: new financing arrangement
The analytical method step by step
CENTRAL CASE, TRADER: NEW FINANCING ARRANGEMENT
We introduced the central case, Trader, in Chapter 5 in order to support the analysis of the impact of interest rate risk on the financial statements of the firm. The central case is presented in Appendix I.
Trader negotiates a new financing agreement with its bank, which will take effect on 1 January 2015. The key data of this financing arrangement are presented below.
Trader has two financial covenants in its new financing arrangement:
- Interest Coverage Ratio (ICR) > 3
- Solvency > 25%
Trader wants to ensure that its financial covenants are ...
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