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A Line of Credit Can Be Either a Formal or an Informal

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A line of credit can be either a formal or an informal agreement between a borrower and a bank regarding the maximum amount of credit the bank will extend to the borrower subject to certain conditions,including the borrower's maintaining its financial strength.


Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

EVA

Economic Value Added, a measure of a company's financial performance based on the residue wealth calculated by deducting its cost of capital from its operating profit.

Investor-supplied Capital

Funds provided by investors to a company, used for business activities and growth.

Operating Income

Revenue from a company’s core business operations, excluding deductions of expenses like cost of goods sold, salaries, and other operating expenses.

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