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In finance, debt and equity are two primary ways businesses raise capital. Debt represents borrowed money, typically repaid with interest, while equity signifies ownership shares in the company, with no obligation for repayment.

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Debt refers to funds that a company borrows from lenders, like banks or investors. This borrowed money is typically repaid over a set period, along with interest. Examples of debt financing include loans and bonds.

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Equity represents ownership in a company. It's raised by issuing shares (stock) to investors, who become part owners. Unlike debt, equity investments do not have a repayment obligation. Instead, investors share in the company's profits and may receive dividends.