Recent Examples of debt service from the Web
Because of the variation in capital outlay and debt service payments at the district level, those two categories were removed from this analysis.
Revenue and spending for debt service, the fund that pays back bonds sold by the district, are budgeted at $9.6 million and $9.9 million respectively.
The administration in recent years made progress in reducing structural deficits by lowering debt service payments, trimming health care costs and cutting staff, according to the forum report.
Reedy Creek issued bonds to pay for the construction and levies a millage on the district to pay off the debt service.
By the way, taxpayers are already on the hook for $10.7 billion—$350 million in debt service this year—from previous housing bonds.
Aluotto said the county has been able to pay down debt service on other property, which will mean no net gain in the county budget to pay for the new facility.
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First Known Use of debt service
Financial Definition of DEBT SERVICE
How It Works
For example, let's say Company XYZ borrows $10,000,000 and the payments work out to $14,000 per month. Making this $14,000 payment is called servicing the debt.
Borrowing money allows companies to make investments without having to commit a lot of their own capital, but the even greater purpose is to maximize shareholder value. As in personal finance, too much debt can be a very, very bad thing, but a little can go a long way. For most investors, it is thus usually unwise to avoid investing in companies with debt; the trick is to find companies that manage their debt well.
This is why companies must consider how debt service fits into their expansion plans if they're using debt to fund the expansion. For example, if Company XYZ is using its borrowed $10,000,000 to build a factory that won't produce anything for five years, how will it service the debt between now and then? In other words, where will it scrape up the cash for those $14,000 payments until the factory is online? And is it sure that the factory will generate at least $14,000 per month once it is online? This is the risk that companies take with debt.
Why It Matters
Companies that issue bonds are perhaps the most well-known debt servicers. They must provide their bondholders with set interest and principal payments on specified dates, and in some cases, must be willing to convert that debt into equity at specified ratios or repay the debt early if certain events occur. When a debtor fails to service its debt, the debtor is sometimes considered in default. In some cases, even the speculation that a debtor might not be able to service its debt can cause its stock price to go down and make it very difficult to obtain financing or other help later.
Because debt service responsibilities can vary among similar companies, some financial measures, particularly EBITDA, intrinsically exclude debt structures in their calculations so comparisons can be made more directly.
legal Definition of debt service
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Seen and Heard
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