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What is debt financing?

Updated: 9/11/2023
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8y ago

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This is balance sheet

Asset = Liabilities(or Debt) + Owners Equity (Mnemonic ALOE)

To buy an asset you need money, if you have it or your parner (s) or share holders you are financing thru' equity (OE) else you issue Bonds/Notes (mostly fixed income instruments) to raise the capital thru' issuing Debt.

so Debt financing is issuing Debt instrument (Like bonds) to finance the purchase of your asset

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