What is Debt Capital?

Debt Capital makes up an essential part of the organization’s capital structure and usually stands for long term capital. Of course if short term loans which are due within a year are rolled then they can become part of the debt capital. There are advantages and disadvantage of a debt capital the main advantage of it is that this value represents the costs of doing business and are entitled for tax deduction.

And this helps the company to increase it’s profits with out any limitations, in simpler terms the firm can make more on his debt capital then servicing it. And the biggest downside of the debt capital is that the interest payments which have to be paid back to the creditors has to be made on time and in full with out any delay.