[accountinglads]

Debt financing means a business takes on a loan or issues bonds to get the necessary funds for operations or expansion. This financing method allows companies to retain full control and ownership, but it adds to their liabilities. Interest payments are often tax-deductible, which can reduce the effective cost of borrowing. However, businesses must be able to generate enough revenue to meet repayment obligations. Too much debt can lead to financial strain, so companies must assess their ability to repay before choosing debt finance.

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