Several interview questions (looking for simple answers)

If you are a debt lender, what are the qualities you look for in a company besides security reasons such as their assets?

If XYZ retailer (Macy, Bloomindales etc..) wants to restructure their debt covenants, where should should you look on its financial statements before making a loan?

I'm really looking for simplified answers. These questions deals with Risk Management and Capital Markets interviews.

2 Comments
 

Debt lenders will want to see stable, predictable cash flows and coverage ratios that they are comfortable with. They will also look at leverage ratios and market cap. Market cap can be thought of as the current "cushion" before the debt is impaired.

Not sure what this question is really getting after, but there are a number of things you would look at. MD&A should mention what it is that is causing them to bump up against the covenant (assuming that is why they are looking to amend).

 
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