Explain the characteristics of line of credit

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Reference no: EM131062904

A) Explain the characteristics of a line of credit. What is it about these loans that make them by far the most popular type of short-term credit?

B) When the economy is growing at a slow pace, it puts a damper on production and sales. This is due to the fact that many people are trying to build up their lives after the recession and do not spend as much as they would usually spend. When consumers spend less, businesses begin to suffer losses in profit. Working capital management ensures a company has enough cash flow to be able to pay their short-term debts and operating expenses. A slow-growing economy can diminish the importance of working capital management because interest rates are low, so monthly payments are low. It can also costs less to pay for operating costs, so a company does not have to maintain as much working capital. Even though the it is not needed as much, it is still important because without any working capital, the company would not be able to pay any debts or operating costs. The company will still need to have some working capital to keep running.

What are your thoughts, DO you agree or disagree? Elaborate and Explain

Reference no: EM131062904

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