Funded debt definitions
| Word backwards | dednuf tbed |
|---|---|
| Part of speech | Noun |
| Syllabic division | fun-ded debt |
| Plural | The plural of funded debt is funded debts. |
| Total letters | 10 |
| Vogais (2) | u,e |
| Consonants (5) | f,n,d,b,t |
When a company needs to raise capital, it often turns to funded debt as a financing option. Funded debt refers to money that a company borrows from external sources like banks, financial institutions, or bondholders with the promise to pay it back over time with interest.
Types of Funded Debt
There are several types of funded debt, including term loans, bonds, and lines of credit. Term loans involve borrowing a set amount of money for a specific period, while bonds are debt securities issued by the company and sold to investors. Lines of credit allow a company to borrow money up to a certain limit as needed.
Benefits of Funded Debt
Funded debt can provide a company with the capital needed to expand operations, invest in new projects, or cover short-term cash flow needs. By leveraging debt, a company can maintain ownership and control while still accessing necessary funds.
Risks of Funded Debt
However, taking on funded debt also comes with risks. Companies must make regular interest payments and repay the principal amount borrowed according to the terms of the agreement. If a company fails to meet its debt obligations, it can face financial difficulties, damage to its credit rating, or even bankruptcy.
Factors to Consider
Before taking on funded debt, companies must carefully consider their ability to repay the debt, the impact on their cash flow, and the cost of borrowing. They should also assess their overall financial health and weigh the benefits of debt financing against the risks.
Financial Health
Funded debt Examples
- The company's expansion was made possible through funded debt.
- The startup secured funding through a mix of equity and funded debt.
- The government plans to issue bonds to finance the project's funded debt.
- The organization's balance sheet showed a significant increase in funded debt.
- Investors were concerned about the company's high levels of funded debt.
- The decision to take on additional funded debt was met with mixed reactions.
- The company was able to refinance its funded debt at a lower interest rate.
- The CEO outlined a plan to reduce the company's funded debt over the next fiscal year.
- Analysts raised questions about the sustainability of the company's funded debt levels.
- The company's credit rating was downgraded due to its reliance on funded debt.