Updated on March 25, 2024Table of Contents
Funded debt is a type of debt that is backed by a specific asset or collateral, such as a loan secured by a mortgage on a house. The asset is used as security for the debt, and if the borrower defaults, the lender can seize the asset and use it to recover their losses.
Funded debt is a type of debt that is backed by collateral. It typically has lower interest rates than unsecured debt but also has higher fees and less flexibility.
What is the difference between funded and unfunded debt?
Funded debt refers to long-term debt with a maturity of more than one year, like bonds or debentures. Unfunded debt, on the other hand, is short-term debt or obligations that must be paid within a year, like short-term loans or accounts payable.
What is funded and unfunded liabilities?
Funded liabilities are obligations for which assets have been set aside to meet future payments, like pension funds. Unfunded liabilities are obligations that do not have dedicated funds, meaning payments will come from future revenues.
What is the difference between funded debt and floating debt?
Funded debt is long-term, fixed-interest debt, while floating debt refers to short-term borrowing, often at variable interest rates, used to manage immediate financial needs.
Where is funded debt on a balance sheet?
Funded debt appears under the “long-term liabilities” section of the balance sheet, as it represents debt obligations that are due in more than one year.
What is floating debt?
Floating debt refers to short-term borrowing, often at variable interest rates, used to cover temporary cash flow shortages or to finance short-term business activities.
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