Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › revolving credit facilities sep/dec 2017 High K Q3
- This topic has 5 replies, 2 voices, and was last updated 4 years ago by John Moffat.
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- August 19, 2019 at 2:29 am #528075
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?
August 19, 2019 at 7:46 am #528086It 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.
August 19, 2019 at 11:09 pm #528145so its more like the credit card facilities. we pay each month but we have limit up to which we can use it?
August 20, 2019 at 6:11 am #528174Correct 🙂
August 20, 2019 at 9:00 pm #528276thank you sir so much..:)
August 21, 2019 at 8:55 am #528326You are very welcome 🙂
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