Investment Dictionary

An obligation to pay a specific amount in money, goods, or services to another party. This is also commonly known as a liability. When buying stock, you would be advised to select companies whose total debt is equal to no more than a third of total assets. Debt and asset figures can be found in Value Line Ratings and Reports, in Standard & Poor's Stock Reports, or in a company's annual report. Usually, the lower the debt ratio, the safer and better the company. A company that is reducing debt is often also worth considering.