LeakagesParts of national income which are not used for consumptions purposes, including net taxes, savings and imports.
LeaseLegal contract in which the owner of an asset, e.g. a property, agrees to another individual/business utilising that asset in return for a consideration, such as rental payments.
Lease backSituation in which a property is sold by its owner to another person/company on condition that the purchaser leases the property back to the original owner for an agreed rent over a set term.
LedgerA book in which the accounts of a business are kept. The main types of ledger are the nominal ledger, containing the nominal accounts which list revenue and costs, the sales ledger which lists the sales accounts of customers, and the purchase ledger which lists the purchase accounts of suppliers.
LesseeA person to whom a lease is granted, also known as a tenant.
LessorA person who grants a lease, also known as a landlord.
LeverageThe use of financial instruments to increase the return on an investment, or the amount of debt used to finance a business’ assets.
Leveraged buyoutThe takeover of a company by investors who use the company’s own assets as collateral to raise the money that finances the bid.
LIBOR (London Inter Bank Offered Rate)Interest rate at which banks lend money to each other.
LienThe right of a creditor to take possession or control of the property of a debtor upon them failing to satisfy a debt.
Limited liabilityThe principle that a shareholder’s liability for company debts is limited to the nominal value of their shares and therefore that their personal assets are not at risk should the company become insolvent.
Liquid marketA market in which large quantities of securities are being bought and sold daily with relative ease.
LiquidationThe sale of the assets of a bankrupt company to pay creditors.
LiquidatorAn official appointed to supervise the liquidation of a company.
LiquidityThe level of ease with which an asset can be converted into cash.
Liquidity ratioSee ‘acid test ratio’.
LitigationThe process of a person or company taking legal action against another.
Loan capitalThe part of a company’s capital structure which is raised by loans, e.g. debentures, which usually pay fixed interest over a fixed period.
Loan stockA security bearing a fixed rate of interest and where the capital is repaid after a given period of time.
Long term liabilitiesDebts of a person or company not due for repayment within the next accounting period.
Loss adjusterAn independent assessor called in by an insurance company to check the validity of claims.