MANSI RASTOGIMANSI RASTOGI asked 5 months ago
1 Answers
RaviRavi Staff answered 5 months ago

it is maximum working capital loan which bank will give to company.
it depends on total working capital requirement and performance of company
there are generally 2 limits sanctioned limit and drawing limit below is illustration about it, sanctioned limit is computed at start of the year, drawing power is computed every month 
Sanction Limit = 1/5th of Last Year Turnover or (75% of LY Stock – Creditor + 60% of LY Debtor)  whichever is lower 
Drawing Limit = (75% of Actual Stock – Actual Creditor) + 60% Actual Debtor

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