Bank Lines of Credit Must Be Judiciously Requested Because the Lines

question 53

Multiple Choice

Bank lines of credit must be judiciously requested because the lines often:

• A) accrue interest regardless of whether funds are borrowed.
• B) require payment of a commitment fee to establish.
• C) appear as a liability on the firm's balance sheet.
• D) have a negative impact on the firm's credit history.

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Definitions:

Motivating

The act of providing motivation or encouragement to someone to trigger action or engagement.

Operational Approach

A method or strategy applied in the functioning and management of operations within an organization to improve efficiency and effectiveness.

Efficiency

The ratio of the output to the input of any system, highlighting the ability to use the least amount of resources to achieve the highest amount of output.

Quality

The standard or measure of excellence of a product, service, or process, often gauged against customer expectations and industry benchmarks.