Question

    Wh ich of the following best describes "Drawing Power"

    in context to a Cash Credit facility given by a bank ?
    A The total credit limit sanctioned by the bank to the borrower for the purpose of meeting working capital requirements Correct Answer Incorrect Answer
    B The total amount of money a borrower can withdraw from the bank, across its various accounts maintained with the bank Correct Answer Incorrect Answer
    C The value of assets pledged by the borrower to secure the loan, adjusted for repayments Correct Answer Incorrect Answer
    D The amount that a borrower can withdraw from the sanctioned credit limit based on the latest stock and receivables statement. Correct Answer Incorrect Answer
    E The change in the repayment schedule based on the inventory and sales position of the company on a quarterly basis. Correct Answer Incorrect Answer

    Solution

    Drawing Power (DP) is the amount a borrower can withdraw from the sanctioned limit based on the current value of stock and receivables, adjusted by the bank's margin policy.

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