H

 

I

Income Statement
The statement of a company's revenues, expenses, gains and losses, resulting with Net Income for the period.

J

Joint and Several Liability
Obligation from one or all the borrowers to their lender.

K

Key Person Insurance
Insurance purchased on the lives of key managers who are seen as crucial to the future of the company. Often, provided as additional security to lenders or financial backers.

L

Lease
A long-term rental agreement under which the owner (lessor) of the property permits someone else (lessee) to use it. Leasing enables a business to acquire equipment without having to pay for it all at the outset, therefore, conserve Cash.

Lease Acquisition Cost
The legal fees and other expenses incurred when acquiring a lease.

Lease Rate
The payment per period stated in a lease contract.

Leaseback
A transaction that involves the sale of some property, and an agreement by the seller to lease the property back from the buyer after the sale. Leaseback agreements are often used in real estate and as a method to finance business expansion.

Leasehold
An asset providing the right to use property under a lease agreement.

Leasehold Improvement
An improvement made to leased property.

Lease-Purchase Agreement
An agreement that allows for portions of lease payments to be used to purchase the leased property.

Letter of Credit
A form of guarantee of payment issued by a bank on behalf of a borrower that assures the payment.

Leverage
The amount of debt in a company's financial structure. May be expressed as a percentage of the total financing or as a ratio of debt to equity.

Liability
A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.

Lien
A legal claim on certain assets that are used to secure a loan.

LIFO
Last in, first out. A method of calculating inventory where the cost of goods sold is the most recently acquired units and the ending inventory is computed from the costs of the oldest units.

Limited Liability
Limitation of loss to what has already been invested.

Limited Liability Company (LLC)
An form of organization that combinines the corporate advantages of limited liability with the partnership advantage of pass-through taxation.

Limited Partner
A partner who has limited legal liability for the obligations of the partnership.

Limited Partnership
A partnership that includes one or more partners who have limited liability.

Line of Credit
A loan arrangement between a bank and a customer allowing the customer to borrow up to a predetermined amount.

Liquidity
The ability of an asset to be converted to cash as quickly as possible and without any price discount.

Loan-to-Value Ratio (LTV)
The ratio of money borrowed on a property to the property's fair market value.

Lockbox
A collection and processing service provided to firms by banks, which collect payments from a dedicated postal box to which the firm directs its customers to send payment to. The banks make several collections per day, process the payments immediately, and deposit the funds into the firm's bank account.

Long-term
In accounting terms, one-year or longer.

M

Mandatory Benefits
Those benefits required by law to be provided by employers. They include: Social Security, Medicare, workers compensation, and unemployment insurance.

Mortgage
Legal document used in the financing of real estate.

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