debt

(noun)

Money that one person or entity owes or is required to pay to another, generally as a result of a loan or other financial transaction.

Related Terms

Examples of debt in the following topics:

  • Corporate Bonds

    • The opposite of secured debt is unsecured debt, which is not linked to any specific piece of property.
    • Senior debt has seniority over subordinated debt in the issuer's capital structure.
    • Subordinated debt is repaid after other debts in the case of liquidation or bankruptcy.
    • Such debt is referred to as subordinate, because the debt providers (the lenders) have subordinate status relative to the normal debt.
    • Because subordinated debt is repaid only after other debts have been paid, they are riskier for lenders.

  • Debt Utilization Ratios

    • In this case, it has a debt ratio of 200%.
    • The debt ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt.
    • When used to calculate a company's financial leverage, the debt usually includes only the Long Term Debt (LTD).
    • D/E = Debt(liabilities)/Equity.
    • The debt service coverage ratio (DSCR), also known as debt coverage ratio (DCR), is the ratio of cash available for debt servicing to interest, principal, and lease payments.

  • Debt Finance

    • A company uses various kinds of debt to finance its operations .
    • The various types of debt can generally be categorized into:
    • A basic loan or "term loan" is the simplest form of debt.
    • This leverage, the proportion of debt to equity, is considered important in determining the riskiness of an investment; the more debt per equity, the riskier.
    • A company uses various kinds of debt to finance its operations.

  • Collection from Delinquent Payables

    • Debt compliance describes various legal measures taken to ensure that debtors honor their debts.
    • There are a number of repercussions for debt noncompliance.
    • This occurs when a consumer becomes severely delinquent on a debt.
    • Bad debts and even fraud are simply part of the cost of doing business.
    • Explain the ramifications of failing to repay credit card and loan debts

  • Long-Term Loans

    • Three common examples of long term loans are government debt, mortgages, and debentures (bonds).
    • Three common examples of long term loans are government debt, mortgages, and bonds or debentures .
    • Government debt (also known as public debt or national debt) is the debt owed by a central government.
    • Government debt is one of numerous methods of financing government operations.
    • A debenture is a document that either creates or acknowledges a debt, and the debt is one without collateral.

  • Secured vs. Unsecured Funding

    • Debt refers to an obligation.
    • A loan is a monetary form of debt.
    • Generally speaking, secured debt may attract lower interest rates than unsecured debt due to the added security for the lender.
    • There are two purposes for a loan secured by debt.
    • For the debtor, a secured debt may receive more favorable terms than that available for unsecured debt, or to be extended credit under circumstances when credit under terms of unsecured debt would not be extended at all.

  • A Brief Definition of Sole Proprietorships

    • A sole proprietorship is owned and run by one individual who receives all profits and has unlimited responsibility for all losses and debts.
    • The individual entrepreneur owns the business and is fully responsible for all its debts and legal liabilities.
    • The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.
    • Every asset of the business is owned by the proprietor, and all debts of the business are the proprietor's.

  • Sample Evaluation

    • Debt Ratio = Total Debt / Total Assets = 6,500/13,840 = 47 percent
    • This indicates the percentage of a company's assets that are provided via debt.
    • This shows the relative proportion of shareholders' equity and debt used to finance a company's assets.

  • Types of Ownership

    • The owners and managers are only liable for the business up to the amount they have invested in the company, and are not liable for the debts incurred by the company unless they have signed a personal guarantee.
    • The owners and managers are only liable for the business up to the amount they have invested in the company, and are not liable for the debts incurred by the company (unless they have signed a personal guarantee, which usually is not the case for a large corporation).
    • A situation in which owners of a business are liable for all the debts that the business may incur.
    • The owner of the business has total and unlimited personal liability of the debts incurred by the business.
    • Each partner has total and unlimited personal liability of the debts incurred by the partnership.

  • Financing Company Operations

    • Examples of bootstrapping include: Owner financing, sweat equity, minimization of the accounts receivable, joint utilization, delaying payment, minimizing inventory, subsidy finance, and personal debt.
    • Examples of Bootstrapping: Owner financing Sweat equity Minimization of the accounts receivable Joint utilization Delaying payment Minimizing inventory Subsidy finance Personal Debt
    • The use of private credit card debt is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs.