Depreciation is an accounting method used to allocate the cost of tangible assets over their useful lives. It represents the gradual decrease in the value of assets due to factors such as wear and tear, obsolescence, or decay. Depreciation expense is recorded on the income statement and reduces the reported net income, reflecting the consumption of asset value over time. Various depreciation methods, such as straight-line depreciation, accelerated depreciation, and units of production depreciation, are used to allocate asset costs systematically and comply with accounting principles and tax regulations. Depreciation is essential for accurately matching expenses with revenue and determining the true economic cost of using assets for business operations. It also affects financial metrics such as profitability, asset turnover, and tax liabilities.

Debentures are long-term debt instruments issued by corporations or governments to raise capital. Unlike bonds, debentures are not secured by specific assets and rely on the issuer's creditworthiness and general reputation for repayment. Debenture holders are creditors of the issuer and have a claim on its assets in the event of default. Debentures typically offer fixed interest payments at regular intervals until maturity when the principal amount is repaid. They are traded in the bond market and may be convertible into equity shares or callable by the issuer under certain conditions. Debentures appeal to investors seeking stable income streams and relatively low-risk investments compared to stocks. However, they carry credit risk, interest rate risk, and liquidity risk, depending on the issuer's financial health and prevailing market conditions.

The debt-to-equity ratio (D/E) is a financial metric used to evaluate a company's leverage by comparing its total debt to shareholders' equity. It is calculated by dividing total liabilities by total shareholders' equity and indicates the proportion of financing provided by creditors versus shareholders. A high D/E ratio suggests that a company relies heavily on debt financing, which may increase financial risk and interest expenses. Conversely, a low D/E ratio indicates a conservative capital structure with less reliance on debt. The optimal D/E ratio varies by industry and depends on factors such as business risk, profitability, and growth prospects. Investors and creditors use the D/E ratio to assess a company's financial stability, solvency, and ability to meet its debt obligations.