Debenture bonds

Bonds and Loans. First mortgage bonds are issued at a stated interest rate due in a stated year. They are backed by the company s property. Debenture bonds, on the other hand, are backed by the general credit of the company rather than by company property. Long-term loans from insurance companies and investment houses are another form of long-term liability. 

Debenture Bonds, 10.3% due in 2015 Debenture Bonds, 11.5% due in 2007 Deferred Income Tax TOTAL LIABILITIES... 

Long-term liabilities are debts due after one year from the date of ffie financial report and include bonds, loans, and deferred mcome tax. Bonds and loans include first mortgage bonds (issued at a stated rate due in a stated year and backed by ffie company s property), debenture bonds (backed by ffie general credit of ffie company rather than by company property), and longterm loans from insurance companies and investment houses. Deferred income taxes are encouraged... 

Capital Investment. Erom the viewpoint of a project, all of the capital that must be raised is external capital. Equity capital is the ownership capital, eg, common and preferred stocks or retained cash, whereas debt capital consists of bonds, mortgages, debentures, and loans. Nearly all investment involves a mixture of both types so as to maximize the return on investment (21). The debt ratio (debt/total capital) for the chemical industry is typically over 30%. Because financial details are not well known during the preliminary phases of project analysis, the investment is viewed simply as the total capital that must be expended to design and build the project. 

Debt Financing In practice, debt financing covers a variety of fixed-income securities, both long-term and short-term. The most common forms of long-term debt are bonds, mortgages, and debentures. 

A debenture is an unsecured bond. Strong companies are in a better position to issue debentures than weak companies since they have less need to pledge specific assets. Debenture holders are really general creditors. Subordinated debenture holders have claims on assets only after the claims of certain other claimants have been met. The issue of subordinated debentures provides a tax advantage for a com-... 

Most debt capital is raised by issuing long-term bonds. A mortgage is a bond that is backed by pledging a specific real asset as security against the loan. An unsecured bond is called a debenture. The ratio of total debt divided by total assets is known as the debt ratio (DR) or leverage of the company. 

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