Principal Payment

Principal is a term used when talking about debt and loans. The principal is the initial amount of loan which has to be repaid, and this is separate from any interest payments. For example, the face value of a bond is the principal of that bond (separate from the coupon). Bond payments are interest-only until maturity as the issuer does not pay off any of the principal until maturity, but only pays the interest due.

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium