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What is Debt?

Definition of Debt

Debt is the duty or obligation that one one individual (the debtor)owes to another (the creditor), with its repayment terms usually stating the interest rate on thedebt,expressed usually as money, delivery of goods, or fulfilling a service, and duration by which the debt must be repaid.In a company's financial structure, the use of debt creates financial leverage that can multiply the creditor's yield from their investment, if the returns generated by the loan exceed the cost of borrowing. This is typically the cheapest way of long-term financing because the interest paid on the debt can be written off as an expense.
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