634 Glossary
interest) after funding operations of the business enterprise and making necessary
capital investments.
Investment risk:The degree of uncertainty as to the realization of expected
returns.
Investment value: The value to a particular investor based on individual invest-
ment requirements and expectations.
IPO:An initial public offering; such transaction is registered with the Securities and
Exchange Commission and permits a company, called a “registrant,” first to offer to
the public its shares of common stock or other securities.
Irregular items of revenue, gain, expense, or loss:See nonrecurring items.
ISP: An Internet service provider is an organization that sells connectivity to the In-
ternet. An ISP has a permanent, high capacity connection to the Internet. Customers
of the ISP use a telephone or cable modem to connect themselves to the ISP, and,
thereby, the Internet. America OnLine is the largest ISP in the world.
Kilo-:The prefix given to another number which means a thousand. Thus, a 10 kilo-
byte document contains 10,000 bytes or characters of data.
Labor variance: A measure of the change in the cost of labor, analyzed according
to wage changes and changes in labor productivity.
LAN:A local area network is a group of computers, usually within one or a few
nearby buildings, which are connected to each other to allow the sharing of data,
printers, e-mail, and other capabilities.
LCD:A liquid crystal display is a method of displaying data using a relatively f lat
panel. Many digital watches use LCDs to show time. LCD technology competes with
CRT technology in computer monitors. LCDs take up less space than CRTs, but cost
more.
Leading and lagging:A foreign-currency hedging technique that involves the
matching of cash f lows associated with foreign currency payables and receivables by
speeding up or slowing down their payment or receipt.
Legacy systems:Older systems that were developed prior to the 1990s using older
technologies. Usually mission critical systems, they are both costly and difficult to
replace.
LIBOR:The London interbank offered rate. The interest rate used in Euromoney
transactions between London banks. It is widely used as the benchmark f loating rate
in swaps.
LIFO inventory method:A method of computing cost of sales that charges the
most recent inventory costs to cost of sales. The most recent (last-in) inventory items
go into the cost of sales computation first (first-out).
LIFO liquidation:A reduction in the physical quantity of inventory by a firm using
the LIFO method. Typically, older and lower costs will be associated with the liqui-
dated quantities. This has the effect of reducing cost of sales and increasing earnings.
This earnings increase is treated as nonrecurring in the computation of sustainable
earnings.
LIFO reserve:The excess (typically) of the replacement cost of a LIFO inventory
over its LIFO carrying value.
Link:A connection from one World Wide Web document to another. Typically, one
navigates the Web by following a series of links.