MANAGEMENT

Detailed explanation-1: -Definition: When a company borrows money to be paid back at a future date with interest it is known as debt financing. It could be in the form of a secured as well as an unsecured loan. A firm takes up a loan to either finance a working capital or an acquisition.

Detailed explanation-2: -Debt is money that is borrowed from financial institutions, individuals, or the bond market. Equity is money the company already has in its coffers or can raise from would-be owners or investors. The term “borrowed capital” is used to distinguish capital acquired with debt from capital acquired with equity.

Detailed explanation-3: -Debt financing is when you borrow money to run your business, as opposed to equity financing, in which you raise money from investors who are in return entitled to a share of the profits from your business.

Detailed explanation-4: -Debt financing is the type of financing in which companies obtain money for financing various business needs by issuing debt instruments and taking loans from banks or other financial institutions. Examples include bond issuance, business credit cards, term loans, peer-to-peer lending services, and invoice factoring.

Detailed explanation-5: -There are three main types of repayment terms for debt financing, long-term, intermediate, and short-term: Long-term debt financing is usually for purchasing assets for the company like equipment, buildings, land, or machinery.