Financial Glossary: Debt


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Debt

Debt

Money, goods, or services that one party is obligated to pay to another in accordance with an expressed or implied agreement.

Debt may or may not be secured; General name for bonds, Notes, mortgages, and other forms of paper evidencing amounts owed and payable on specified dates or on demand. An obligation to repay a sum of principal, plus Interest. In corporate terms, debt often refers to bonds or similar securities.

A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with Interest.

Bonds, loans and commercial paper are all examples of debt. For example, a company may look to borrow $1 million so they can buy a certain piece of equipment. In this case, the debt of $1 million Will need to be paid back (with Interest owing) to the creditor at a later date.

Posted by EBD Group AG

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