Terms
L
labor force participation rate: the percentage
of the adult, noninsitutionalized population who are either
working at a paid job or seeking paid work
labor income: payments to workers, including
wages, salaries, and fringe benefits
labor intensive: Business concern that
has relatively low investment in machinery and equipment
and relatively high labor costs as a percentage of its production
costs.
labor market discrimination: exists when
qualified people are treated disadvantageously in employment,
because of characteristics such as race, gender, age, sexual
preference, or disability
labor markets: markets where people offer
their labor services to employers
labor productivity: the level of output
that can be produced per worker
labor union Organized group of workers; the objectives of
the organization are to increase job security, improve working
conditions, and increase wages and benefits.
labor: the flow of time, effort, skill,
and knowledge that humans directly provide as inputs into
productive activities
laissez-faire capitalism: a national system
characterized by private corporate ownership and a great
reliance on exchange as a mode of organization (with relatively
little organization by public administration)
laissez-faire economy: an economy with
little government regulation
laissez-faire proprietary capitalism: a
system of economic organization characterized by individual
private ownership of capital (both produced and financial),
private direction of investment, and expansion of the market
system of distribution
Last-in, first-out (LIFO): A method of
valuing inventory and cost of goods sold under which the
items purchased last are assumed to be sold first.
law of demand: As the price of an item
decreases people will demand a larger quantity of that item,
ceteris paribus
Law of Demand: People purchase more of
any particular good or service as its relative price falls;
they purchase less as its relative price rises.
law of supply: As the payment for or price
of an item increases, the quantity of the item supplied
to the market will increase, ceteris paribus…
Law of Supply: At higher relative prices,
the quantity supplied of a good will increase; at lower
relative prices, smaller quantities will be supplied.
laws of motion economy: Guidelines for
increasing the efficiency of human movement and tool design.
learning by doing: Knowledge gained during
production that increases productivity.
Leasehold improvement: An addition or improvement
made to a leased structure.
legal entity: Business organization that
is recognized by the law as having a separate legal existence.
letter of credit: Agreement to honor demands
for payment under certain conditions.
leverage (debt) ratios: Ratios which indicate
what percentage of the assets of a business actually belong
to the owners and what percentage is subject to creditors
claims.
Leverage ratio: A ratio that measures the
extent of a firm's financing with debt relative to equity
and its ability to cover interest and other fixed charges.
leveraged buyout (LBO): Purchase heavily
financed with debt, where the potential cash flow of the
target company is expected to be sufficient to meet debt
repayments.
Liabilities: Claims against assets.
liability: what one person or organization
owes to another
licensing: Authorizing another company
to produce and/or market a venture’s product. The
licensee pays the licensor a royalty for the right to produce
and sell the product.
Limit Order: An order placed with a broker
to buy or sell a security at a specified or better price.
Limited Liability Company (LLC): Hybrid
business entity having features of both partnerships and
corporations. If formed properly it will be taxed as a partnership
and its members will enjoy limited liability like corporate
shareholders.
limited liability company: Corporation
in which stockholders have limited liability but pay personal
income taxes on business profits.
limited liability: a legal structure in
which creditors of a business can demand from owners no
more than the owners' investment in the business
limited partner: Investor in a partnership
who is not involved in day to day operations and whose liability
is limited to the amount of his or her investment in the
partnership.
limited partnership Partnership having one or more general
partners and several limited partners.
limiting factor: the fixed input that creates
a capacity constraint
line of credit: Credit limit extended to
a business which may be drawn upon when required by the
business. There are no payments due on the line of credit
unless the business actually borrows the money.
Line of credit: A prearranged loan allowing
borrowing up to a certain maximum amount.
liquidation value: the value of the physical
assets of a firm, should it be dissolved and its assets
sold separately
liquidity demand for money: Demand for
money that represents the needs and desires individuals
or companies can fill on short notice without incurring
excessive costs.
Liquidity ratio: A ratio that measures
a firm's ability to meet needs for cash as they arise.
liquidity ratios: Ratio which determines
how much of a companies current assets are available to
meet short term creditor’s claims.
Liquidity: The ability of a firm to generate
sufficient cash to meet cash needs.
living standard (or lifestyle) goals: goals
related to satisfying basic needs and getting pleasure through
use of goods and services
living trust: Trust that is set up during
the life of the trustor.
load mutual funds: Mutual funds that charge
a commission on the initial investment.
loan: money borrowed for temporary use,
on the condition that it be repaid with interest
local monopoly: a monopoly limited to a
specific geographical area
lockbox: Post office box that is opened
by an agent of the bank and checks received there are immediately
deposited in a company account.
logistics (physical distribution): Activities
of distribution involved in the physical relocation of products.
London Stock Exchange: Origins of this
stock exchange in England can be traced back to the Muscovy
Company, formed in 1553, for financing merchant vessels.
Long Position: Ownership of a stock or
an opening buy transaction on an option position.
long run: in terms of production processes,
a time period in which all inputs to production can be varied
in quantity
long-range plan (strategic plan): Company’s
overall plan for the future.
long-run average cost: the cost of production,
per unit of output, when all inputs can be varied in quantity
long-run elasticity: reflects the response
to a price change that occurs after economic actors have
had time to make adjustments
long-term contracts: contracts whose terms
extend over a long period of time
long-term debt: It is the debt that a company
owes that it does not expect to pay during the current accounting
year. Used synonymously with long-term liabilities. Found
on the company’s balance sheet.
Long-term debt to total capitalization:
See Summary of financial ratios
Lower of cost or market method: A method of valuing inventory
under which cost or market, whichever is lower, is selected
for each item, each group, or for the entire inventory.
Long-term debt: Obligations with maturities
longer than one year.
Lorenz curve: a graph used to portray an
income distribution, with percentiles of households on the
horizontal axis and the cumulative percentage of income
on the vertical axis
low time discount rate: the economist's phrase for a strong
concern with future benefits, even if getting them is costly
in the present
