Use of Long-Term Debt
Traditional debt vehicles include various forms of loans, such as term loans or bonds that companies can leverage to grow or expand their operations. Although term loans are fairly straightforward, several different types of bonds exist.
When companies take on debt, they are most concerned about the effective cost of the debt and the associated provisions that could further restrict the company's future activities. This lesson covers several specific concerns related to debt contract provisions. Financial managers must understand how each of these debts might impact the company before entering into them.
Several factors impact long-term debt financing when companies enter into an arrangement for additional capital. The relative importance of these factors may vary based on the company that issues the debt.
