Funded Debt

AAA

DEFINITION of 'Funded Debt'

A company's debt, such as bonds, long-term notes payables or debentures that will mature in more than one year or one business cycle. This type of debt is classified as funded debt because it is funded by interest payments made by the borrowing firm over the term of the loan.

Funded debt is synonymous with "long-term debt".

INVESTOPEDIA EXPLAINS 'Funded Debt'

Funded debt is one form of financing a company can use to finance its long-term capital projects, such as the addition of a new product line or the expansion of operations. The firm may also use short-term financing to fund its long-term operations. This exposes the firm to a higher degree of interest rate and refinancing risk, but allows for more flexibility in its financing.

RELATED TERMS
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change ...
  2. Refinancing Risk

    1. The risk that an early unscheduled repayment of principal ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Note

    A financial security that generally has a longer term than a ...
Related Articles
  1. Evaluating A Company's Capital Structure
    Bonds & Fixed Income

    Evaluating A Company's Capital Structure

  2. Boost Bond Returns With Laddering
    Bonds & Fixed Income

    Boost Bond Returns With Laddering

  3. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

  4. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center