{"id":"exec-loan-covenant-check-adjusted-ebitda","audience":"executives","category":"leadership-work","track":"leadership","level":"advanced","technique":"verification","title":"Test three loan covenants with adjusted EBITDA and show the math","free":false,"task":"Test the three covenants and output a table with the header Covenant | Calculation | Limit | Status, one row each, with Status exactly Pass or Fail. Use adjusted EBITDA (remove one-time gains). Show the calculation like \"21.0 / 6.0 = 3.5x\", rounded to one decimal. Then add the exact line: Counsel and Finance confirm the covenant definitions. Plain text, under 110 words.","materialLabel":"Covenant terms and numbers (attached to your prompt automatically)","material":"Loan covenants - quarter-end test (figures in $ millions)\n\nCovenant 1: Debt to EBITDA must be at most 3.5x.\nCovenant 2: Interest coverage (EBITDA divided by interest expense) must be at least 3.0x.\nCovenant 3: Current ratio (current assets divided by current liabilities) must be at least 1.2x.\n\nNumbers\n- Total debt: 21.0\n- Trailing twelve-month EBITDA as reported: 7.0, which includes a one-time gain of 1.0 from selling an old building.\n- Annual interest expense: 2.0\n- Current assets: 13.2\n- Current liabilities: 12.0\n\nThe loan agreement defines EBITDA to exclude one-time gains.\nThe CFO's draft slide shows EBITDA of 7.0 and says \"all covenants met\". That draft has not been checked.","rules":[{"type":"maxWords","max":110},{"type":"plainText"}],"mistakes":[{"title":"Using reported EBITDA","why":"The AI uses 7.0 and shows 3.0x debt to EBITDA.","fix":"Say: \"Use adjusted EBITDA: remove the one-time gain.\"","checks":["r1","r2"]},{"title":"Trusting the draft slide","why":"The AI says all covenants are met.","fix":"Say: \"Calculate each covenant yourself.\"","checks":["r1"]},{"title":"Wrong status at the limit","why":"The AI marks 3.5x as Fail.","fix":"Say: \"At most 3.5x means 3.5x passes.\"","checks":["r1"]},{"title":"Wrong table","why":"The AI adds a conclusion paragraph.","fix":"Say: \"Exactly this header, three rows, then the closing line.\"","checks":["r0","r2"]},{"title":"Markdown","why":"The AI bolds statuses.","fix":"Say: \"Plain text.\"","checks":["plainText"]},{"title":"Trusting the AI to count words","why":"AI is bad at counting. Ask for a total word limit and it often lands over it.","fix":"Cap each part instead, for example: \"each line under 15 words.\"","checks":["maxWords"]}],"promptHints":[{"label":"Gives the header","patterns":["covenant \\|","calculation","status"]},{"label":"Adjusted EBITDA","patterns":["adjusted ebitda","one-time"]},{"label":"Shows the working","patterns":["21\\.0 /","calculation"]},{"label":"Exact statuses","patterns":["pass","fail"]},{"label":"Closing line","patterns":["counsel and finance confirm"]}],"hint":"Give the header, say to use adjusted EBITDA, show the calculation format, and give the closing line.","rubricLabels":["Has the header Covenant | Calculation | Limit | Status and exactly three rows","Debt to EBITDA is 21.0 / 6.0 = 3.5x (Pass, at the limit of 3.5x), interest coverage is 6.0 / 2.0 = 3.0x (Pass, at the limit of 3.0x) and the current ratio is 13.2 / 12.0 = 1.1x (Fail, below 1.2x)","Adjusted EBITDA of 6.0 is used rather than 7.0, and the last line is exactly \"Counsel and Finance confirm the covenant definitions.\""]}