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long term debt means replacing short debt with securities of longer maturity. long term debt often is called funded debt it is one of major long term source of financing. the big firm can raise fund by selling long term bonds / debenture in the open market. debt holders becomes the creditor of the debt issuing company. there is a claim on firm' s income and assets as stated in the bond contract is called indenture. the right,facilities. obligation of are indicated in the indenture. the rights, facilities obligation of invastors are indicated in the indenture there are many types of long term debt instruments i.e. tern loan, debt secured and censecured notes marketable and non marketable debt and so on features of long term debt. feature of long term debts are as follows:

  • the debt holder usually dose not have the right to vote.
  • if the bonds go into default. the debt holder in effect taken control of the company.
  • the debt holder does not participate in supervisor profit.
  • interest payment on debts is debuctible as tax expenses.
  • debt usually has a fixed maturity date.

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