Debt

Debt (Definition)

Debt is an amount of money borrowed by one party from another.

Key aspects of debt include:

1. Represents a financial obligation that must be repaid, often with interest
2. Can be short-term (due within one year) or long-term (due after one year)
3. Common forms include loans, bonds, and credit card balances
4. Used by businesses to finance operations, expansion, or large purchases
5. Appears as a liability on a companys balance sheet
6. Can provide tax benefits through deductible interest payments
7. Managements debt level and repayment ability are important indicators of financial health

Understanding and managing debt is crucial for maintaining a companys financial stability and creditworthiness.