terms is the key to learning about business. Terms L-M are listed below:
Letter of Credit,
Letter of Agreement
Line of Credit,
|Letter of Credit
A commitment, usually by a bank on behalf of a client, to
pay a beneficiary a stated amount of money under specified
conditions. It guarantees that the seller will get
paid. This is usually used in international trade.
The parties to a Letter of Credit are the supplier, the
buyer's bank, the buyer and sometimes the seller's bank.
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Letter of Agreement
A Letter of Agreement is a written agreement between two
parties. It can cover anything the parties agree to.
It stipulates who does what and when. It is less
extensive than a contract. It usually a 1-3 page
document that focus on a specific action.
Leverage is using debt instead of equity to achieve a
financial advantage. For example, a company can
finance larger operations by raising money through borrowing
(debt) rather than by giving up equity (ownership) in the
business to an investor.
Leverage Buyout (LBO) are
usually financed through a combination of equity and debt in
which the cash flow or assets of the target company is used
to secure and repay the debt. Source:
Fiscal Year is the 12 month period used for calculating
financial statements and filing corporate income tax
reports. Unlike the calendar year that begin on 1
January and ends on 31 December, the Fiscal year for most
corporations in the U.S. is from July to June. Each
company will determine their own fiscal year. The
federal government uses October to September as it's fiscal
There ar two types of Liabilities:
Current Liabilities and Long Term
Long Term Liabilities are payment
obligations that go beyond a year. They include bonds,
long term leases, pension obligations, etc.
Licensing means giving permission to another. In
business licensing means giving another entity the
permission or right to produce and sell your product under
certain conditions agreed to by all parties concerned.
In return for licensing your product the manufacturer agrees
to pay you a certain fee/commission. For example, you
may grant a manufacturer the right to manufacturer and sell
your product for a specific period of time and in certain
countries and in return the manufacturer will pay you $1.00
for every item sold.
|Line of Credit
A pre-approved loan between a
financial institution and borrower that may be used
repeatedly up to a certain limit and can subsequently be
paid back prior to payments comign due. The pre-approved
amount will be set out in the agreement between the lender
and the borrower.
of Credit is also referred to as a "Open-End Credit" or
"Revolving Line of Credit". Source:
Liquidity is the ability to transform assets into cash.
The most liquid asset is cash. Some assets can be
converted to cash much quicker than others. For
example, securities can be converted to cash much faster
than real estate can. The type of assets will
determine how liquid your business is.
Macro Economics is a branch of
economics dealing with the performance, structure, behavior,
and decision-making of the whole economy. This includes
national, regional, and global economies. Macroeconomists
study aggregated indicators such as GDP, unemployment rates,
and price indices to understand how the whole economy
functions. Macroeconomists develop models that explain the
relationship between such factors as national income,
output, consumption, unemployment, inflation, savings,
international trade and international finance. Source:
Market analysis is assessment of opportunities, strengths,
weaknesses and threats of a company by studying its specific
segment within an industry.
Market Forces are the factors affecting the price and
availability of a commodity or product in a free market.
They include supply, demand, legal, financial, etc.
Market niche is identifying a segment of the market that is
not being served and developing a product or service that
meets their needs.
Market share is the percentage of the market that your
business serves. For example, if you sell hamburgers
and there are 99 other busineses doing the same thing to a
total customer base of 1 million, the percentage of your
market share will be the amount of people out of the 1
million that buy hamburgers from your business.
Markup is the difference between what it cost you to produce
a product or service and what you sell them for. This
is usually expressed as a percentage.
Microeconomics is primarily
focused on the actions of individual agents, such as firms
and consumers, and how their behavior determines prices and
quantities in specific markets. Source:
Multi-level marketing (MLM) is a marketing strategy in which
the sales force is compensated not only for sales they
personally generate, but also for the sales of the other
salespeople that they recruit. This recruited sales force is
also referred to as the participant's downline, and can
provide multiple levels of compensation. Other terms for MLM
include pyramid selling, network marketing, and referral