revolving credit facilities sep/dec 2017 High K Q3

Mmisbahkiran6y ago

Hi sir John what does revolving credit facilities mean? are they like SPVs (special purpose vehicle)? is there any islamic finance which become part of such facilities. they mentioned this in ratios question. and i am trying to search on it but didn't get any reasonable answer. why they mention that in question that High K would benefit from revolving credit facilities?

John MoffatTutor6y ago#1

It is nothing to do with Islamic finance. Suppose you were to borrow $1,000 and repay $100 a year. After 10 years you would have repaid and then you might consider borrowing more. That is the way normal borrowing works. With revolving credit, you borrow $1,000, you repay $100 in the first year, but you are then entitled to borrow another $100. That way you can always be borrowing $1,000.

Mmisbahkiran6y ago#2

so its more like the credit card facilities. we pay each month but we have limit up to which we can use it?

John MoffatTutor6y ago#3

Correct :-)

Mmisbahkiran6y ago#4

thank you sir so much..:)

John MoffatTutor6y ago#5

You are very welcome :-)

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