An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal circumstances. 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.


Loading the player...


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.

  1. Debt Ceiling

    The maximum amount of monies the United States can borrow. The ...
  2. Debt Security

    Any debt instrument that can be bought or sold between two parties ...
  3. Funded Debt

    A company's debt, such as bonds, long-term notes payables or ...
  4. Delinquent

    The failure to accomplish what is required by law or duty, such ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
  6. Net Debt

    A metric that shows a company's overall debt situation by netting ...
Related Articles
  1. Markets

    10 Most Famous Leveraged Buyouts

    Learn about the boldest, riskiest leveraged buyouts in history and how they either become famous for failing miserably or making billions.
  2. Investing Basics

    7 Iconic Brands That No Longer Exist

    Understand the value of branding and what makes good brands great. Learn about seven iconic brands that failed and no longer exist.
  3. Technical Indicators

    Key Financial Ratios to Analyze Tech Companies

    Understand the technology industry and the companies that operate in it. Learn about the key financial ratios used to analyze tech companies.
  4. Economics

    Explaining Debt

    Debt is any amount a borrower owes a lender.
  5. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  6. Budgeting

    How Much Debt Can You Handle?

    Follow these five steps to manage debt without cutting up your credit cards.
  7. Credit & Loans

    Should You Close Your Credit Card?

    Find out the consequences before deciding to end your credit agreement.
  8. Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  9. Retirement

    Test Your Money Personality

    Find out which of the five profiles fits your style, and how this will affect your future.
  10. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  1. What debt/equity ratio is average in the automotive sector?

    Investors and creditors assess an automotive sector company's financial stability and health by determining its debt-to-equity ... Read Full Answer >>
  2. What debt level should I look for when investing in an oil and gas company?

    Investors should look for debt level in an oil and gas company that is appropriate for their risk tolerance. In a bull market ... Read Full Answer >>
  3. Is credit counseling as damaging as bankruptcy on my credit report?

    Credit counseling is not as damaging as bankruptcy to your credit report. Credit counseling ends up being noted on your credit ... Read Full Answer >>
  4. Which is better: A high or low equity multiplier?

    An equity multiplier measures a company's financial leverage by using a ratio of the company's total assets to its stockholders' ... Read Full Answer >>
  5. What can I tell about a company by looking at its solvency ratios?

    Solvency ratios gauge a company's financial health and its ability to meet long-term obligations. Use solvency ratios to ... Read Full Answer >>
  6. What impact would deflation have on the national debt?

    Deflation is a scenario where there are falling prices of goods and services across the economy. Although the ability to ... Read Full Answer >>
  7. What is a debt/equity swap?

    Occasionally, a company will need to undergo some financial restructuring to better position itself for long term success. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  5. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
Trading Center