A loan agreement between a bank and a customer specified that the debt ratio could not exceed 60 percent. Explain the purpose of this restrictive agreement.

College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter9: Sales And Purchases
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A loan agreement between a bank and a customer specified that the debt ratio could not exceed 60 percent. Explain the purpose of this restrictive agreement.

 

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