What Is Debt Deflation? Debt deflation is an economic theory suggesting that a general downturn in the economy can occur when prices fall and the value of currency rises, causing a climb in the real value of debt. The theory originated with 20th century economist Irving Fisher. The essence of debt deflation is that when
What Is Debt-to-Equity (D/E) Ratio? Debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity. D/E ratio is an important metric in corporate finance. It is a measure of the degree to which a company is financing its operations with debt
What Is Debt Fatigue? Debt fatigue occurs when a debtor becomes overwhelmed by the amount of debt incurred and the seeming futility of the debt repayment process. Debt fatigue may result in a debtor giving up on making loan payments and overspending again. Steps To Getting Out Of Debt Understanding Debt Fatigue Debt fatigue can
What Is Debt Financing? Debt financing occurs when a firm raises money for working capital or capital expenditures by selling debt instruments to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid. The
What Is a Debt Fund A debt fund is an investment pool, such as a mutual fund or exchange-traded fund, in which the core holdings comprise fixed income investments. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. On average, the fee ratios on debt funds are lower than those attached
What Is the Debt-to-GDP Ratio? The debt-to-GDP ratio is the metric comparing a country’s public debt to its gross domestic product (GDP). By comparing what a country owes with what it produces, the debt-to-GDP ratio reliably indicates that particular country’s ability to pay back its debts. Often expressed as a percentage, this ratio can also be
What Is a Debt Instrument? A debt instrument is a tool an entity can use to raise capital. It is a documented, binding obligation that provides funds to an entity in return for a promise from the entity to repay a lender or investor in accordance with terms of a contract. Debt instrument contracts detail
What Is Debt Load? Debt load is the total amount of debt carried by an individual, government, or business. Publicly traded companies record their debt load on their balance sheets, providing investors with a snapshot of what they own and owe every quarter. Key Takeaways Debt load is the total amount of debt carried by
What Is a Debtor in Possession (DIP)? A debtor in possession (DIP) is a person or corporation that has filed for Chapter 11 bankruptcy protection but still holds property to which creditors have a legal claim under a lien or other security interest. A DIP may continue to do business using those assets. However, it
What Is Debtor-in-Possession (DIP) Financing? Debtor-in-possession (DIP) financing is a special kind of financing meant for companies that are in bankruptcy. Only companies that have filed for bankruptcy protection under Chapter 11 are allowed to access DIP financing, which usually happens at the start of a filing. DIP financing is used to facilitate the reorganization of
