If a firm experiences a financial loss for the year, the loss is shared equally by the debt holders and equity holders.

Financial Loss

A decrease in monetary value, often related to business operations, investments, or unforeseen expenses.

Debt Holders

Debt holders are individuals or entities that have lent money to an organization in exchange for interest payments, holding a claim to the organization's assets until the debt is repaid.

Equity Holders

Individuals or entities that own equity shares in a company, giving them rights to its profits and assets.