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    Classification of debt and rating

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    What are the different classification and ratings of debt?

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    Different classification of debt:

    Debt means amount owned by the company to the third person. Debt is the liability of the company and should be mentioned in the liabilities side of the Balance sheet. There are different types of debt.

    1. Trade creditors and accounts payable are types of unsecured creditors.
    2. Income tax, Sales Tax or any other tax due to the Government is also the debt due by the company. This debt is called preferential debt.
    3. Debentures: Debenture is the certificate of agreement of loan given under the company's stamp and carries an undertaking that the debenture holder will get ...

    Solution Summary

    The answer contains the classification of debt ,types of debentures, bank borrowings, factors to be considered for rating of debt by rating agency and the types of risk.