Free workbook

See the breach
two quarters early.

A covenant breach never announces itself a year out. It drifts in: two soft quarters, a draw on the line, and the compliance certificate becomes a negotiation. This tracker watches the two tests most credit agreements run and reports the room left in the units that matter.

What's inside

  • Net leverage and fixed-charge coverage, computed quarterly across eight quarters, actuals and projections side by side
  • Headroom as a percentage on both tests, with WATCH flagging automatically under 15% and breaches flagging themselves
  • The EBITDA cushion in plain dollars: how far trailing earnings can fall before the leverage test breaks
  • Built on the common covenant forms, with the reminder that your agreement's definitions govern
  • No macros, no lock-in. Opens in Excel and imports cleanly into Google Sheets

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How to use it

  1. Copy your two covenant limits from the credit agreement's definitions page, not from memory.
  2. Each quarter, enter TTM EBITDA, debt, cash, and the fixed-charge components. Fifteen minutes.
  3. Project the forward quarters. A WATCH found two quarters out is a conversation with your lender from strength; found at the test date, it is a waiver request.
  4. Never let the lender find it first. Banks work with businesses that surface problems early and punish surprises.

For sponsor-backed companies this pairs with our private equity work and the 13-week cash discipline. If you want this running against your numbers properly, start a conversation.