Define a financial test
Add covenant, name it and choose its metric, direction and threshold. Leverage limits commonly use ≤ and coverage minima ≥, but the supported covenant metrics allow either direction where offered. Linked Minimum Cash is the exception: its threshold comes from Financing and its direction is ≥. Set Active, Effective start/end, Test frequency and a comment. No threshold is guessed from the covenant name.
Test frequency is independent of the view
Tests follow Annual, Quarterly, Monthly or Weekly frequency at the corresponding period-end date, within inclusive effective start/end dates. The selected display granularity does not alter these dates. The timeline shows the chosen covenant’s tests within a fiscal year. A latest test can precede the selected observation date; Inspector labels previously tested headroom and shows the test date instead of presenting it as a new test.
Calculate signed headroom
For ≤, headroom = threshold − actual. For ≥, headroom = actual − threshold. Positive headroom therefore always means room before breach. Relative headroom divides by the absolute threshold. At a 4.0× leverage maximum and 3.8× actual leverage, headroom is 0.2×, or 5%. With a zero threshold, relative headroom is undefined; the absolute comparison still works.
Read Healthy, Tight and Breached
Negative headroom is Breached. Nonnegative headroom at or below 10% of the threshold is Tight; larger headroom is Healthy. At a zero threshold only equality is Tight. The table shows the latest test, minimum absolute headroom, first breach and status. The cross-covenant forecast summary uses relative headroom where defined, so different ratio units are not compared as if equal amounts. Inactive and N/M are separate states.
Use a covenant for capacity deliberately
Use for capacity is available only for metrics and directions with supported ceilings or the Minimum Cash gate. Changing the metric resets its threshold; an incompatible direction clears capacity usage. Once included, the rule limits capacity throughout its effective dates while retaining its test frequency for covenant reporting. These are configured financial tests; lender definitions, cure rights, baskets and legal enforcement are not modeled.
Documents the current implemented behavior. Numerical examples are synthetic, not market assumptions.