The value of a tenant's interest in real estate, particularly under a long-term lease at below-market rental rates.
The least squares method, also known as least squares regression, is a statistical technique used for estimating cost behavior by plotting observed cost levels against various activity levels and calculating the best fit line.
In economics, the least-cost production rule states that in order to maximize profit, a firm must ensure that each dollar spent on each unit of input produces at least an equivalent dollar value of output.
A leave of absence refers to a formally approved period during which an employee is permitted to take time off work without losing their job seniority or associated perks. It is often granted for specific purposes such as education, research, maternity/paternity leave, or personal health.
An LED is an electronic device that emits light when electric current flows through it. They are used in a variety of applications including electronic displays, lighting, and indicators.
A ledger is a collection of accounts of a similar type, traditionally maintained in a large book or, in modern systems, as computer records. Common types of ledgers include the nominal ledger, debtors' ledger, and creditors' ledger.
A ledger account is a record in a ledger where all the financial transactions pertaining to a specific person, item, or activity (such as a debtor or stock item) are documented.
A 'left-click' refers to pressing the left or primary button on a computer mouse, typically used for selecting or interacting with on-screen elements.
The term 'legacy' refers to the disposition of personal property by will. This is a legal term often used in estate planning to describe a person’s wishes for distributing their tangible and intangible valuables after their death.
Legacy costs are the expenses an employer incurs for providing retiree pensions, health insurance, and other benefits even after an employee has retired. These are ongoing employment-related expenses.
The age at which a person can enter into binding contracts or agree to other legal acts without the consent of another adult. In most states, the legal age, also called the age of majority, is 18 years.
Legal capital represents the amount of a company's stockholders' equity which cannot be reduced by the payment of dividends, ensuring a company's financial stability and the protection of creditors.
A legal description is a detailed way of describing a piece of real estate that is accepted legally and used for property-specific documentation. It identifies the property through various surveying methods such as government rectangular survey, metes and bounds, or recorded plat (lot and block number).
A legal entity refers to a person or organization that has the legal standing to enter into a contract and may be sued for failing to perform as agreed in the contract. A child under legal age is not a legal entity. A corporation is considered a legal entity since it is deemed a person in the eyes of the law.
Lexis is an online database for legal research; its resources include the Federal Tax library, which contains the full text of the Internal Revenue Code, as well as regulations, revenue rulings, and court decisions of interest to tax practitioners.
A prepaid legal insurance coverage plan sold on a group basis, entitling members to a schedule of benefits for legal services such as adoptions, probates, and divorces.
A legal form is a structured model of a legal document that contains the necessary phrases and words of art required to ensure the document is procedurally correct in accordance with legal standards. The meticulous arrangement of such forms serves as a template for drafting legally binding documents such as contracts, wills, or pleadings, ensuring their compliance with specific legal requirements and formalities.
Legal investment refers to safe and permissible investment options for investors who have fiduciary responsibilities to their clients or beneficiaries. These investments must meet specific legal standards, ensuring the safety and reliability of the investments.
A list of high-quality securities approved by a state agency for permissible holdings by fiduciary institutions.
A legal monopoly refers to the exclusive right granted to a company to offer a particular service or product within a specific territory. In exchange, the company agrees to have its policies and rates regulated.
A legal name is the official designation by which an individual or entity is recognized legally, distinct from any nickname or informal moniker.
A legal notice is a formal notification to an individual or entity regarding their legal obligations, rights, or duties as required by law. This communication method ensures that the recipient is aware of and can respond to legal matters in a timely manner.
A legal opinion is a statement as to legality, written by an authorized official such as a city attorney or an attorney general. In the context of municipal bond issuances, it typically pertains to the legality of the bond issue, often prepared by a law firm specializing in public borrowings.
A legal person, also known as an artificial person, is an entity recognized by law as having rights and duties similar to those of a natural person. Legal persons can enter into contracts, own property, sue, and be sued.
A Legal Representative is an individual tasked with overseeing the legal affairs of another person or taxpayer, such as an executor or administrator of an estate.
A legal right is an interest that the law will protect. It is a privilege or entitlement granted by a legal system to individuals or entities, allowing them to perform certain actions or be free from others performing certain actions against them.
Legal tender refers to the money that must be accepted in discharge of a debt. It can be limited or unlimited depending on the specified limits of payment.
A collection of rights of ownership that are defined or recognized by law or that could be successfully defended in a court of law.
A legal wrong is an act that infringes upon a legal right, causing harm or loss to another party, which may lead to liability or legal consequences.
Legal-size paper is a U.S. paper size standard measuring 8½ by 14 inches, commonly used for legal documents.
Legalese is the specialized language of legal documents, characterized by its formality, precision, and often complex structure, which can be difficult for the layperson to understand without interpretation.
A legatee is an individual or entity that receives property or assets through the terms stipulated in a last will and testament.
Legging-In refers to entering into a hedging contract after becoming the debtor or creditor under a debt instrument. Any gain or loss from legging-in is deferred until the qualifying debt instrument matures or is disposed of in the future.
Legging-out refers to the process of disposing of one or more unmatured elements of a qualified hedging transaction. Any gain or loss from legging-out is deferred until the qualifying debt instrument matures or is disposed of in the future.
Action with respect to acts, bills, and resolutions or similar items by Congress, a state legislature, local governing body, public referendum, or constitutional amendment. Legislation does not include acts or rulings of executive, judicial, or administrative bodies.
The Lehman Brothers scandal emerged after the collapse of Lehman Brothers in late 2008. It involved using a loophole in US accounting standards known as 'Repo 105' to hide substantial losses on the subprime mortgage market.
A 'lemon' refers to a product or investment that performs poorly and fails to meet expectations. This term is commonly used to describe defective cars and underperforming stocks. Lemon laws in several states provide consumers with legal recourse for their underwhelming purchases.
An individual or firm that extends money to a borrower with the expectation of being repaid, usually with interest, creating debt in the form of loans. Lenders are paid off before stockholders in the event of corporate liquidation.
Lender liability refers to the legal responsibility of a financial institution, such as a bank, savings and loan association (S&L), or credit union, to a potential borrower when a loan commitment is made. If the lender fails to provide the loan as promised, it may be responsible for the damages suffered by the potential borrower.
An amount of freight that is insufficient to command the lower shipping rates that apply to full carloads.
An economy characterized by low levels of income, industrialization, and modernization along with low standards of living.
The lessee is an individual or entity that rents or leases an asset or property from another party (the lessor) for a stipulated period and at an agreed price.
A lessor is an individual or entity that grants a lease to another party, allowing them to use an asset for a specified period in exchange for periodic payments. Lessors are commonly involved in real estate, equipment leases, and other forms of property or assets.
In real estate, 'let' refers to granting the use of realty (real estate) for compensation. The term does not always imply the act of leasing but can also refer to the granting of a license.
A formal letter written by a parent company to a lender, acknowledging its relationship with another group company and its awareness of a loan being made to that company. It is the weakest form of a letter of comfort.
A letter provided to a bank by the parent company of a subsidiary applying for a loan, offering informal assurance without a formal guarantee of repayment responsibility.
A letter of credit, or documentary credit, is a fundamental financial tool in international trade, providing a promise of payment from a bank to a seller on behalf of a buyer under specified conditions.
A letter of credit (L/C) is a financial instrument issued by a bank or other financial institution that guarantees a buyer's payment to a seller will be received on time and for the correct amount.
A Letter of Credit (L/C) is an instrument or document issued by a bank guaranteeing the payment of a customer's drafts up to a stated amount for a specified period. It substitutes the bank's credit for the buyer's and eliminates the seller's risk. It is used extensively in international trade.
A letter of engagement is a formal agreement between a professional service provider and a client outlining the terms and conditions of the service engagement.
A Letter of Intent (LOI) is a document outlining an agreement between two or more parties before the agreement is finalized. It is commonly used in business transactions such as mergers, acquisitions, and partnerships.
A Letter of Intent (LOI) is a document outlining the preliminary commitment of one party to do business with another. The LOI can be used as a means to formalize discussions that may culminate in a final agreement. It includes terms and conditions of the planned transaction.
A document that sets out the main terms of an agreement between two or more parties and their intention to enter into a binding contract once certain details have been finalized. While not a formal contract itself, certain provisions can be enforceable.
A formal written record of representations made by the management of an organization to the auditors, aimed at confirming matters of material significance impacting the audit and financial statements.
A letter ruling, also known as an advance ruling, is a written statement issued by a tax authority to a taxpayer, clarifying how specific transactions will be dealt with under the applicable tax laws.
Letter stock is a category of stock that derives its name from an inscription on the face of the stock certificate, indicating that the shares have not been registered with the Securities and Exchange Commission (SEC) and, therefore, cannot be sold to the general public.
Letter-size is a U.S. paper size standard, measuring 8½ by 11 inches, commonly used for various documents in North America.
A letterfoot is the section of the letterhead information printed at the bottom of a sheet of letter paper. It commonly includes company details, contact information, and legal disclosures.
Level debt service is a provision in a municipal charter stipulating that payments on municipal debt be approximately equal every year, making it easier to project the amount of tax revenue needed to meet obligations.
A standard unit of measure achieved after considerable experience; highly predictable sequence of actions in production.
A level playing field is a concept wherein government policies are designed to reduce disparities between different sectors of the economy or between domestic and international competitors. The objective is to create a fair competitive environment where no particular group or entity has an undue advantage over others.
Level Premium is a type of insurance premium that remains constant throughout the duration of the policy, regardless of changes in the nature of the risk or the insured's life circumstances.
A level-payment income stream is a series of equal cash flows received or paid at regular intervals over a specified period. Often associated with annuities, it ensures a constant amount of payment or income in each period.
A level-payment mortgage requires the same payment each month or other period to achieve full amortization over the loan term. This structure provides predictability for borrowers regarding monthly expenses.
Leverage refers to the use of various financial instruments or borrowed capital—such as margin—to increase the potential return of an investment.
Leverage ratios are financial metrics that evaluate the level of debt a business is using compared to its equity and assets. These ratios are crucial for analyzing the financial health and sustainability of companies.
An in-depth exploration of leveraged buyouts, including definitions, examples, related terms, frequently asked questions, and resources for further study.
A leveraged buyout (LBO) is a financial transaction where a company is acquired primarily using borrowed funds, with the target company's assets often used as collateral for the loans.
A Leveraged Buyout (LBO) involves the acquisition of a company utilizing a significant amount of borrowed money. Typically, the assets of the acquired company serve as collateral, and the intention is to use the company's cash flow to repay the obtained loans.
A leveraged company is a business that has debt in addition to equity in its capital structure. The term is often used to describe companies that are highly leveraged, typically industrial companies with more than one-third of their capitalization in the form of debt.
A Leveraged Employee Stock Ownership Plan (ESOP), also known as a Leveraged ESOP, is a type of ESOP that borrows money to purchase employer stock directly from the company.
A leveraged lease is a lease agreement that involves a third-party lender in addition to the lessor and lessee. This structure is commonly used in financing large capital assets.
Levy refers to the legal process by which a government or agency imposes a tax, fee, or fine, or seizes property to satisfy an outstanding debt or obligation.
LEXIS, short for Legal Exchange Information Service, is a comprehensive online legal research service that provides access to a vast repository of legal resources including case law, statutes, regulations, news, and business information. It is widely used by legal professionals, law students, and researchers.
A liability is an obligation that a company needs to settle in the future, generally in the form of economic benefits such as money. Liabilities often result from past transactions and play a crucial role in a company's financial health by representing what it owes.
Liability insurance provides protection from claims arising from injuries or damage to other people or property. It is essential for motor vehicle, home, and business owners. Business liability insurance premiums are deductible.
A component of a business liability policy that provides coverage for bodily injury or property damage liability to members of the public while on business premises.
Legal liability refers to obligations and responsibilities that are subject to evaluation, interpretation, and enforcement in a court of law. Casualty insurance provides coverage for an insured against civil legal liability suits, but not for criminal legal liability, intentional torts, or liability for breach of contract.
In the context of legal responsibility, the term implies the proportional assumption of liability by companies based on their market share, especially relevant in cases of product liability.
Liable means being legally responsible or obligated for something. It often relates to situations where a person or entity is required to uphold their part of a legal duty or may be subjected to penalties if they fail to do so.
A Liar Loan is a type of mortgage loan in which the borrower is allowed to take out the loan without providing standard documentation to prove income, employment, or assets. These loans were quite prevalent during the housing bubble of the mid-2000s and significantly contributed to the subsequent financial crisis due to their risky nature.
Libel is a tort consisting of a false, malicious, unprivileged publication that aims to defame a living person or to mar the memory of one deceased. Printed or written material, signs, or pictures that tend to expose a person to public scorn, hatred, contempt, or ridicule may be considered libelous.
The London Inter Bank Bid Rate (LIBID) represents the interest rate banks are willing to pay for interbank deposits in the London interbank market.
LIBOR, an acronym for the London Inter Bank Offered Rate, is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
Library rate is a special postage rate used for mailing books and other educational materials between libraries, educational institutions, and similar organizations, often for scholarly or research purposes.
The Libson Shops Doctrine refers to a Supreme Court limitation on the survival of net operating loss (NOL) carryovers following a statutory merger, based on the continuity of enterprise theory.
A grant of permission or privilege, whether by private individuals or governmental authority, that legalizes the performance of specific activities. In property law, a license is a personal, revocable privilege concerning land use.
A License Bond is an instrument that guarantees compliance with various city, county, and state laws that govern the issuance of a particular license to conduct business.
License laws govern the activities of occupations that require licensing, ensuring professionals meet certain standards to practice in fields such as accounting, law, medicine, nursing, barbering, insurance, and real estate.
A licensed appraiser is an individual who is qualified to perform appraisals of real property but generally has less experience and credentials compared to certified appraisers. Licensed appraisers meet certain state-specific requirements.
A licensee is an individual or entity who is granted a license to engage in certain activities or occupy premises without being a customer, servant, or trespasser. They have permission to use the property primarily for their own interest or convenience.
A licensing examination is a test given to a prospective licensee to determine their ability to represent the public and demonstrate proficiency in a particular professional field.
The designation LIAB stands for Licentiate of the International Association of Book-keepers, a professional accreditation that recognizes the expertise and skills of bookkeepers affiliated with the IAB.
A lien is a legal right or interest that a creditor has in the debtor's property, which lasts until the debt obligation is satisfied. It is a type of encumbrance used to secure the payment of a debt, judgment, mortgage, or taxes.
Lien-theory states are states in which the laws give a lien on property to secure debt, as opposed to title-theory states where the lender becomes the title owner of the property.
A lienholder is an individual or entity that has a lien on a particular piece of property or asset, essentially providing them with a right to keep possession of it until a debt owed by the owner is discharged.
An annuity that makes a guaranteed fixed payment for the rest of the life of the annuitant. After the annuitant dies, the beneficiaries receive no further payments.
Life Assurance is an insurance policy that pays a specified amount of money on the death of the life assured or, in the case of an endowment assurance policy, on the death of the life assured or at the end of an agreed period, whichever is the earlier.
A life beneficiary is a party entitled to the use of or income from property during their lifetime. Upon their death, the property's benefits typically pass to another individual, often referred to as a remainder person.
The life cycle refers to the stages a firm or its product passes through, such as development, growth, expansion, maturity, saturation, and decline. Unlike certain staple products, most new products follow this progression.
