Why Is a Bond Considered to Be a Loan but a Share

question 17

Essay

Why is a bond considered to be a loan but a share of stock is not?

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Definitions:

Statement of Cash Flows

A financial report that shows how changes in balance sheet and income accounts affected cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Dividends

Disbursements by a company to its stockholders, often as a profit-sharing mechanism.

Obligations

Legal or financial duties that one party is bound to perform for another, such as the repayment of a loan.

Investing Section

A part of the cash flow statement that shows cash flows from the acquisition and disposal of long-term investments and fixed assets.