Effective debt

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Effective debt

The total debt owed by a firm to its creditors.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Effective Debt

The total debt of a company plus the value of its lease payments. Effective debt helps potential investors and lenders determine the ongoing expenses of a company due to debt service and similar costs. If the effective debt rises above a certain level, the company is unlikely to be profitable because of a low net cash flow.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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