Debt Capacity & Covenants

Methods and settings

Start with an explicit rule

Activate the operator and choose the scenario, selected period and Financial basis. The initial configuration has no automatic lender thresholds. Add capacity constraint to define a financial limit, or Add covenant to monitor tests. Rules have names and Active flags; a blank threshold asks for setup rather than implying a zero threshold. Coverage-based capacity also needs an Incremental interest rate % p.a.

Read the financial basis

Reported uses the reported Model values. Adjusted uses the configured adjusted financial series; without adjustments, it equals Reported and the operator says so. Debt and cash are closing stocks, while ratio flow components use trailing twelve months. Commitments, linked Minimum Cash and Required Funding still come from reported Financing even when the ratio basis is Adjusted. Metric definitions explain these mixed but explicit sources.

Keep capacity and monitoring distinct

A capacity constraint asks how much debt the assumptions support. A covenant asks whether an actual financial ratio or Minimum Cash test satisfies its threshold. Use for capacity can make a supported covenant participate in both jobs. Its capacity restriction applies throughout effective dates, while covenant tests retain their own frequency. A debt-service covenant is supported for monitoring but does not define a debt-capacity ceiling.

Review the summary and exceptions

The primary cards show Net Debt / EBITDA, EBITDA / Interest and Additional Debt Capacity. Review binding constraint, minimum forecast capacity, first constrained period, least covenant headroom and first breach beneath them. N/M means the result is not meaningfully evaluable with the current data or setup; inspect the reason. A missing threshold, short history and nonpositive earnings require different corrections.

What this analysis does not execute

Capacity never draws a loan, changes a commitment or cures Required Funding. It is an analytical assessment with fixed modeled cash and stated marginal-interest assumptions. Covenants are configured financial tests, not complete legal agreements. There are up to 50 capacity constraints and 50 covenants. Use test rules for status interpretation and scenario analysis for comparisons rather than treating a green status as lender approval.