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Definition: Debt

It is an obligation of the borrower to the lender. When a lender (creditor) lends the money to the borrower (debtor), a debt is created. It should be repaid within a certain fixed period of time and it also entails a payment of interest along with the repayment of original amount.

Debt is one of the two ways of financing a company. The other way of financing is equity. A company needs to maintain an optimum capital structure by having the right mix of equity and debt.

Debt includes term loans, mortgages, syndicated loans, debentures, bonds etc.

Browse the definition and meaning of more terms similar to Debt. The Management Dictionary covers over 7000 business concepts from 6 categories. This definition and concept has been researched & authored by our Business Concepts Team members.

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