FUNDED DEBT Meaning and
Definition
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Funded debt refers to the total amount of borrowed money that a company or government entity owes to creditors and investors, which typically involves the issuance of bonds or other long-term debt instruments. It represents the portion of a company's or government's debt that has been financed through borrowing and is considered a liability on their balance sheet.
Unlike short-term debt, funded debt has a maturity period of more than one year. It is structured in a way that specifies regular interest payments and the repayment of principal upon maturity. The interest paid on funded debt is usually fixed, providing a sense of stability and predictability for both the borrower and the lender.
Funded debt plays a crucial role in determining a company's or government's creditworthiness and financial health, as it reflects their ability to honor their financial obligations over an extended period. Lenders and investors often assess the funded debt levels and the ability to service this debt when evaluating the risk associated with lending to or investing in an entity.
Furthermore, funded debt is an important factor in determining an entity's debt-to-equity ratio, which compares the total outstanding debt to the shareholders' equity. This ratio helps assess the entity's leverage and financial stability.
Overall, funded debt can be viewed as the long-term debt obligations of an entity that are financed through borrowing, usually through the issuance of bonds. It represents a key component of an entity's liabilities and influences their creditworthiness and financial standing.
Common Misspellings for FUNDED DEBT
- dunded debt
- cunded debt
- vunded debt
- gunded debt
- tunded debt
- runded debt
- fynded debt
- fhnded debt
- fjnded debt
- finded debt
- f8nded debt
- f7nded debt
- fubded debt
- fumded debt
- fujded debt
- fuhded debt
- funsed debt
- funxed debt
- funced debt
- funfed debt
Etymology of FUNDED DEBT
The word "funded" in the context of debt refers to the act of providing financial resources or capital to support a particular obligation. It comes from the verb "fund", which originated from the Latin word "funds", meaning "a foundation" or "a sum of money". The term "debt" originated from the Old English word "dæd", which meant "a duty" or "an action". Over time, "debt" evolved to refer specifically to an obligation to repay borrowed money. Therefore, "funded debt" describes a debt that has been financed or provided with sufficient funds.
