RSM221H1 Chapter Notes - Chapter 14: Effective Interest Rate, Unsecured Debt, Leveraged Buyout
6 Oct 2016
School
Department
Course
Professor
Document Summary
Long-term debt consists of obligations that are not payable within a year or the operating cycle of the business, whichever is longer, and will therefore require probable sacrifices of economic benefits in the future. Restrictive covenants terms or conditions that are meant to limit activities and protect both lenders and borrowers: examples of these types of covenants include working capital and dividend restrictions, and limitations on incurring additional debt. Most common type of lt debt on financial statements. Bond interest payments are usually made semi-annually, but the interest rate is generally expressed as an annual rate. The issuing company may choose to place a bond issue privately by selling the bonds directly to a large institution without the aid of an underwriter, which is known as private placement. Commodity backed bonds: commodity-backed debt (aka asset-linked debt) is redeemable in amounts of a commodity.
