In which of these scenarios is a revolver draw necessary?
A)When cash available for optional debt repayment is positive
B)When cash available for optional debt repayment is negative
C)When cash available on the balance sheet is zero
D)When there is an increase in net working capital

Question

Quizplus · Accepted Answer

A revolver draw is necessary when cash available for optional debt repayment is negative as this indicates a cash shortfall that must be covered by borrowing from the revolver. In scenarios where cash available for optional debt repayment is positive or the balance sheet shows zero cash, a revolver draw may not be necessary. An increase in net working capital may indicate a need for additional financing, but this does not necessarily require a revolver draw specifically.

In Which of These Scenarios Is a Revolver Draw Necessary