Glossary of Financial Terms - L

Labour-Sponsored Venture Funds

Venture capital corporations established by labour unions. They function as other venture capital corporations but are subject to government regulation.

Lease Payment

The consideration paid by the lessee to the lessor in exchange for the use of the leased equipment/property. Payments are usually made at fixed intervals.

Leasing

Contract granting use of real estate, equipment, or other fixed assets for a specified time in exchange for payment, usually in the form of rent. The owner of the leased property is called the lessor, the user the lessee. See Also:

• Capital Lease
• Operating Lease
• Sale and Leaseback

Lending Policy

A course of action adopted by a financial institution to guide and usually determine present and future decisions in the light of given conditions.

Lessee

A person to whom a lease is granted; the user of the asset.

Lessor

A person who grants a lease; the owner of the asset.

Letter of Intent

A document signifying genuine interest in reaching a final agreement, conditional upon the results of more detailed due diligence and negotiations.

Letters of Credit

A letter of credit is a guarantee of payment by a bank (issuing institution)to a third party for a specific amount of money, if certain conditions are met.

Leverage

The relationship between interest bearing debt and equity in a company(financial leverage) or the effect of fixed expense on after tax earnings(operating leverage).

Lien

The right of a party to a contract to take possession of an asset unless payment under the contract is received in full. A lien must be registered under the various provincial laws in order to be valid and enforceable.

Line of Credit

An agreement negotiated between a borrower and a lender which establishes the maximum amount against which a borrower may draw. The agreement also sets out other conditions, such as how and when money borrowed against the line of credit is to be repaid.

Liquidity

The degree to which an asset can be cheaply and quickly turned into money.

Liquidity Crisis

Situation in which a firm is unable to meet due bills; a period of "technical insolvency".

Loan Capital

Borrowed funds having a fixed interest rate.

Long Term Debt

Liability due in a year or more.

Longer-Term Fixed Assets

Assets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied.