L

Leverage:

The amount of debt or borrowed money an organization is using to fund its operations. Leverage is not good or bad. If it is used wisely, it can have tax advantages or other beneficial impacts. Organizations that are highly leveraged (that is, carrying too much debt versus their assets) may be at great risk if any adverse business conditions arise that would cause them to be unable to pay their expenses. They may not be able to get any additional loans in an emergency. Such organizations may be forced into bankruptcy or driven out of business.

Leverage Ratio:

Total liabilities divided by owner ‚ s equity.

Liabilities:

Debts and other financial obligations that an organization has at a particular point in time.

Liquidity:

A measure of the ease that a non-cash asset (such as real estate) can be converted into cash assets.

Liquidity Ratio:

See quick ratio.

Long-Term Assets:

Assets that will be held by an organization for more than 1 year from the date of the balance sheet.

Long-Term Liabilities:

Liabilities that will come due for an organization more than 1 year from the date of the balance sheet.