FIN.12:4.3 - Keep several limits and their common causes together

Compare commitment room, borrowing-base room, covenant room, collateral or guarantee availability and dated service capacity. The binding constraint can change between states or dates. Where each limit is a fixed bound on the same incremental draw under the scenario, the smallest permitted amount governs. Where the draw changes a denominator, rate or other limit, solve the coupled conditions rather than take the minimum of stale numbers.

The same receivable can support a borrowing base, generate a forecast receipt and become doubtful under a customer failure. Update all affected uses together. A financing plan that retains full collateral eligibility while removing its cash collection needs an explicit basis for that difference. Likewise, assigning one asset as security for two facilities does not create two free collateral pools; recover the actual priority and sharing arrangement.

Treat flexibility as the available actions after these restrictions, not as a favorable current ratio. A company may have numerical headroom but lack authority to pledge the needed asset or time to satisfy a draw condition. The useful result says which actions remain available, their extent and deadline, and which adverse event removes them. FIN.10 uses that result to compare instruments; FIN.11 uses it to compare financing policies.