Essay: Bond is a Liability to be Repaid

A bond just like any other loan has a liability to be repaid.  Showing the amount of bonds payable on the balance sheet proves that the company is indebted. Just like any other loan, it shows that it cannot raise the required capital without payable bonds.  Omitting the bonds payable in the balance sheet will prove to the competitors that the company can raise the required capital to finance all its investments.

Since Urban Outfitters omits the amounts of loans, interests and bonds payable on its financial statements it has to have special arrangements whenever it wants to secure a loan. The company has to proof to the lending firms that it has the capability to pay by showing the records of past payments. It proves that it pays without any problems the past loans.

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