Question
Calculate Drawing Powe
Solution
Drawing Power: (Stock (Insured) – Creditors) * (1-margin rate) + Book debts (debtors) within 90 days * (1 – margin rate) = (800000 – 3500000) * (1- 0.25) + (800000-350000) * (1 – 0.4) = 337500 + 270000 = 607500 ***In this case, book debts that are more than 90 days are deducted from total book debts. Sanctioned limit is 900000 but DP arrived at 607500. Therefore, the maximum amount that a borrower can withdraw is 607500.
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