Financial capital#Borrowed capital
The debt represents a portion of the balance sheet of a company and is listed on the liabilities side. It represents a part of the means by which the company's assets were financed. Borrowing is given if the capital investment in general contractual legal rules can be terminated and temporary, establishes a compensation claim of the investor and the investor is not involved in the company and accordingly shall not be liable.
The debt represents the part of the agent, which is not provided by the company or its owners.
- These include loans from banks, trade credit and bonds, which are combined with other financial securities under the generic term liabilities. Within the liabilities an area business-related debt can be distinguished. These include loans from stakeholders of the company, for example, shareholders or employees.
The change in debt is referred to as net lending. In government this usually corresponds to the budget balance in reporting entity, there is no direct link between current account balance and net lending, as changes in equity are possible.
Borrowing in real estate finance
In connection with a real estate financing debt is referred to as the difference between the total cost to be financed, for example, for the construction or purchase of a property and the existing equity. It is the sum of all with banks and other lenders (such as employers, public or private ) loans taken out to finance a construction project and is documented in the financing plan.
Borrowing in the option pricing theory
In the context of option pricing theory borrowing can be seen as a short put. As long as the company is insolvent, ie up to a certain repayment, lenders will only receive the residual value of the company. From the point at which all repayment claims can be paid off, the equity investors get the rest of the proceeds from cash flows. This manifests itself in a horizontally extending curve of the debt claim. The formula for the debt is: