Stock Market Terms By Letter: L

L

Lamb: An inexperienced speculator.

Last-In-First-Ouf (LIFO): An accounting method for valuing inventory. It treats the last item of stock purchased as the first item of stock used. Its opposite is FIFO. During periods of inflation, LIFO gives a more accurate picture of the true profitability of a firm.

Leverage: US term for Gearing.

Liability: Any item of debt which is owed to others. It is normally divided into different categories, based on their maturity. For example, Current Liabilities, Deferred or Long-term Liabilities, Accrued Liabilities and Contingent Liabilities.

Lien: The right to retain goods until the seller has been paid.

Limited Company: The short form ‘LTD’ or ‘BHD’ following the name of a company indicates that it has been registered under the Companies Act with Limited Liability for the stockholders.

Limited Liability: The legal exemption of a stockholder from being responsible for the debts of a firm beyond the amount he has invested in it.

Liquid: Term used to describe assets that are easily converted into cash.