debt

play
noun \ ˈdet \
Updated on: 26 Jul 2017

Definition of debt

1 :sin, trespass
  • Forgive us our debts.
2 :something owed :obligation
  • unable to pay off his debts
  • owe them a debt of gratitude
  • a criminal's debt to society
3 :a state of being under obligation to pay or repay someone or something in return for something received :a state of owing
  • deeply in debt to creditors
4 law, business :the common-law action for the recovery of money held to be due

debtless

play \-ləs\ adjective

Examples of debt in a Sentence

  1. He is trying to pay off gambling debts.

  2. The company has run up huge debts.

  3. Their debts are piling up.

  4. He's been working three jobs in an attempt to get out of debt.

  5. The company was in debt but is now turning a profit.

  6. I am deep in debt.

  7. I'm thousands of dollars in debt.

  8. She went into debt to pay for college.

  9. I'm worried that we will fall into debt.

Recent Examples of debt from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'debt.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of debt

Middle English dette, debte, from Anglo-French dette something owed, from Vulgar Latin *debita, from Latin, plural of debitum debt, from neuter of debitus, past participle of debēre to owe, from de- + habēre to have — more at give


Financial Definition of DEBT

debt

What It Is

In the business world, debt is an amount borrowed.

How It Works

For example, let's assume Company XYZ has invented a new product that will revolutionize the widget market. The company is certain there will be demand from billions of people around the world, and therefore it needs to build a new factory. If Company XYZ's funds for constructing the factory were limited to its cash on hand, say $200,000, it certainly could not build the kind of factory it needs to capitalize on this tremendous opportunity and would thus be very limited in its output and profits (and would leave the market wide open for competitors to fill the void). With some debt, however, Company XYZ could build the factory and take advantage of the profit potential of its product. The debt essentially magnifies the profits.

Debt comes in several forms, but in the business world, bank loans and corporate or government bonds are the most common.

Why It Matters

Debt is a liability, meaning that the lender has a claim on a company’s assets. Debt due within one year is generally classified as short-term debt on a company’s balance sheet. Debt due in more than one year is considered long-term debt. It is important to note here that debt commonly comes to mind when one considers liabilities, but not all liabilities are debt. Companies may incur several other types of liabilities, including (but not limited to) upcoming payroll, bonuses, legal settlements, payments to vendors, certain derivatives, contracts, certain types of leases, and required stock redemptions. Common balance sheet categories for liabilities include accounts payable, accrued expenses and debt.

Information about a company’s debt is a key component of accurate financial reporting and a crucial part of thorough financial analysis. Excessive debt can ruin a company but is not always detrimental. The use of debt financing can magnify profits that would have otherwise gone unrealized.


DEBT Defined for English Language Learners

debt

play
noun

Definition of debt for English Language Learners

  • : an amount of money that you owe to a person, bank, company, etc.

  • : the state of owing money to someone or something

  • : the fact that you have been influenced or helped by someone or something


DEBT Defined for Kids

debt

play
noun \ ˈdet \

Definition of debt for Students

1 :1sin 1
  • We ask forgiveness of our debts.
2 :something owed to another
3 :the condition of owing something
  • I am in debt to you for all your help.

Law Dictionary

debt

noun

legal Definition of debt

1 :something owed: as
a :a specific sum of money or a performance due another especially by agreement (as a loan agreement)
  • to pay the debts…of the United States
  • U.S. Constitution art. I
  • a debt for alimony
b :an obligation to pay or perform on another's claim
  • discharged the debt
— compare asset, equity 4
Note: It is often up to the courts to decide what is or is not a debt under various laws. Courts disagree whether criminal restitution is a debt under the Bankruptcy Code.
antecedent debt
:debt that is incurred prior to a property transfer paying or securing the debt — compare preference
bad debt
:a debt that cannot be collected
Note: An income tax deduction is allowed for bad debts.
consumer debt
:debt that is incurred by an individual primarily for the purchase of consumer goods or services — compare consumer credit
judgment debt
:a debt established by a judgment and enforceable by a legal process (as an execution of judgment or attachment)
c :a state of owing
  • in debt
d :the aggregate of money owed
  • the national debt
2 :the common-law action for the recovery of a specified sum of money or a sum that can be simply and certainly determined called also action of debt, writ of debt; compare assumpsit, covenant

Origin and Etymology of debt

Old French dette, ultimately from Latin debita, plural of debitum debt, from neuter of debitus, past participle of debere to owe



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