Debt

Debt appears on the balance sheet a liability. 

Companies borrow money for a myriad of reasons: expansion of operations, cash flow problems, purchase of equipment or buildings, and to purchase back stock. So, debt, in and of itself, is neither a negative or positive, though having no loans is good. Why? Owing money requires future cash flows (principal and interest) that could be used for other purposes, including distributions to owners or higher compensation for employees or expansion of the business.

When entities incur loans, they should disclose information such as the following:

• Issuance cost
• Term of the loan
• Collateral
• Periodic payment requirements
• The current- and long-term portions 
• The type of loan
• Covenant requirements

Debt disclosures tend to be material. That is, they are important to financial statement readers, especially to lenders. 

See my article Auditing Debt: The Why and How Guide.