Debt Capital

• If a business needs to borrow funds, it is known as dept capital
• The business must show the ratio between equity and debt capital in the business plan
• The solvency of the business is determined by the ratio of equity capital and debt capital
• It is very important that businesses must be solvent at all times
• Solvency


  The ability of a business to pay its debts and expenses as they come due, without becoming bankrupt or insolvent.