In the world of finance and investing, the terms “equity”, “debt”, “stocks”, and “bonds” are essential terms. Thus, it is critical to understand what they mean and how they relate to each other. As household consumers, most individuals are familiar with the definition of debt. Like individuals, corporations use debt as a means to finance their operations and business growth. Unlike most individuals, corporations use debt to raise cash for investment in what is intended to be a profitable operation or initiative. For individuals, debt tends to be predominantly used to fund consumption.