Business glossary

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Labor force - People of working age who are available for paid employment, including the unemployed looking for work, but excluding categories such as full-time students, careers, and the long-term sick and disabled.

Lapse - The termination of an option without trade in the underlying security or commodity.

Law of diminishing returns - A rule stating that as one factor of production is increased while others remain constant, the extra output generated by the additional input will eventually fall. The law of diminishing returns therefore means that extra workers, extra capital, extra machinery, or extra land may not necessarily raise output as much as expected.

Lease - A contract between the owner (lessor) and the tenant (lessee) stating the conditions under which the tenant may occupy or use the property. Business glossary.

Ledger - A book that contains the totals from all of journals.

Legal Rate Of Interest - The maximum rate of interest fixed by the laws of the various states, which a lender may charge a borrower for the use of money.

Lemon - A product, especially a car, that is defective in some way.

Letter of agreement - A document that constitutes a simple form of contract.

Letter of Credit - A letter issued by a bank that can be presented to another bank to authorize the issue of credit or money.

Leverage - A method of corporate funding in which a higher proportion of funds is raised through borrowing than share issue.

Liability - A debt that has no claim on a debtor's assets or less claim than another debt.

Liability insurance - Risk protection for actions for which a business is liable.

License - A contractual arrangement, or a document representing this, in which one organization gives another the rights to produce, sell, or use something in return for payment.

Lien - A charge upon or security interest in real or personal property maintained to ensure the satisfaction of a debt or duty ordinarily arising by operation of law. Business glossary.

Lifestyle - A pattern of living that comprises an individual's activities, interests and opinions.

Limited partnership - A legal partnership where some owners are allowed to assume responsibility only up to the amount invested.

Line of credit - A lender agrees to allow a borrower to draw a pre-specified amount from an account on an as needed basis.

Liquid assets - Financial assets that can be quickly converted to cash.

Liquidation - The disposal, at maximum prices, of the collateral securing a loan, and the voluntary and enforced collection of the remaining loan balance from the obligators and/or guarantors.

Liquidity - The ability of a business to meet its financial responsibilities. The degree of readiness with which assets can be converted into cash without loss.

Litigation - The practice of taking legal action through the judicial process. Business glossary.

Loan agreement - A document that states what a business can and can­not do as long as it owes money to the lender.

Loan - Money lent with interest.

Long term liabilities - The liabilities (expenses) that will not mature within the next year.

Loss Rate - A rate developed by comparing the ratio of total loans charged off to the total loans disbursed from inception of the program to the present date.