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what is landlocked | landlocked in the context of real estate refers to a piece of property that is inaccessible via public thoroughfare except through an adjacent lot a vacant lot that is located behind a strip mall and can only be reached by walking through the mall qualifies as this type of lot landlocked property is locked up meaning it s surrounded by other property understanding landlockedlandlocked parcels are typically the result of subdivisions or the division of a larger parcel of land into smaller parcels which are sold off individually ideally the smaller parcels would each have access to a public right of way but sometimes that s not possible for example a seller might wish to subdivide a large square parcel with a landscape feature in the center such as a mountain that s unsuitable for development rather than carving out a gerrymandered parcel that gives road access to the mountain it might be left landlocked landlocked real estate properties can occur when land that s been in a family for many years is divided up between family members eventually when properties are sold there becomes a need for the properties to be separately owned accessing the landlocked property might not have been an issue when the surrounding properties were owned by the same family however once the ownership changes for some of the properties access to the landlocked real estate can become an issue advantages and disadvantages of landlocked real estatelandlocked property typically has a lower value than the surrounding properties due to its inaccessibility however that doesn t mean the landlocked real estate is worth nothing in addition because it has a lower value it may be a better value in expensive neighborhoods for prospective buyers this may allow these buyers access to a community that they would otherwise be priced out of obtaining a loan or mortgage for a landlocked property however can be difficult since banks may not finance a landlocked property the lack of access to the property for public services such as medical and fire personnel can make banks and prospective buyers pass on dealing with a landlocked property easementaccess to a landlocked property or parcel can be challenging for the owner however state and federal laws protect the right of property owners to productive use of their land which means in general the right to gain access to a public road an easement which grants the right to cross over neighboring land is used to provide such access there are various types of easements some easier to acquire than others but savvy buyers who understand the rules can find good investments in landlocked property the stress free way to get an easement is through a friendly negotiation with a neighboring landowner they might be tempted to grant a verbal promise which allows a landlocked owner to cross their land but buyers are advised to get the promise in writing a written easement created by a real estate lawyer and registered with the local deed office provides security for the landlocked property owner with a verbal arrangement the neighbor could change their mind or sell their land to a less hospitable owner finally the neighbor s word won t carry much weight when the landlocked parcel goes up for sale again a permanent easement in writing avoids all of these potential problems easement by necessityif a neighbor balks at signing a friendly easement or asks for unreasonable compensation it may be necessary to obtain an easement by necessity an easement by necessity is a court order granting the landowner legally entitled access to their property the catch is that the landlocked owner must prove through a deed and title search that both the landlocked property and the neighboring property were at one time owned by the same person the court is essentially ruling that when the property was subdivided the owner neglected to provide the necessary road access it s important to note that filing for an easement by necessity will entail legal costs also it may leave the landlocked owner with an angry neighbor who can appeal the ruling there are exceptions to an easement by necessity such as land patents granted by the federal government even those dating back hundreds of years to avoid being embroiled in legal battles over a landlocked property buyers should consult an experienced real estate attorney can you deny access to landlocked property no you cannot deny access to landlocked property there are federal and state laws in place that allow access to landlocked property even though direct access is not possible one of the best ways to allow access to landlocked property is through an easement or easement by necessity | |
why should i invest in a landlocked property | there are many reasons why a person would want to invest in a landlocked property landlocked properties are lower in value so they might be an entry point into an otherwise expensive neighborhood that would be out of the person s budget if a landlocked property is next to a business or area of business that is likely to expand in the future then holding onto a landlocked property and selling it in the future for a higher price when the business area expands is also another reason to purchase such property | |
what is severance of unity | severance of unity is one of the items that the owner of a landlocked property must prove when trying to obtain an easement by necessity it proves that the initial owner of the land subdivided the property and part of the division was transferred to the claimant | |
what is a landlord | the term landlord refers to a property owner who rents or leases that property to another party in exchange for rent payments landlords can be individuals businesses or other entities landlords typically provide the necessary maintenance or repairs during the rental period while the tenant or leaseholder is responsible for the cleanliness and general upkeep of the property specific duties and obligations of each party are normally outlined in a lease agreement | |
what landlords do | as noted above a landlord is anyone who owns property and rents it out to someone else this party is called the tenant or leaseholder landlords invest in real estate as a source of financial profit by owning property and leasing it out a landlord can earn a steady stream of income along with the potential for appreciation of their properties landlords may be individuals businesses or other entities such as government agencies similarly the types of properties they own can also vary that means that the types of properties they own aren t limited to just homes in addition to single family residences their real estate portfolios may include landlords typically use leases when they rent out their assets a lease is a legally binding contract that outlines the terms under which one party agrees to rent property from another it guarantees the lessee or tenant the use of an asset and guarantees that the lessor the property owner or landlord is entitled to regular payments for a specified period in exchange there are some landlords who own property but aren t actually located on or near the property these entities are called absentee landlords being an absentee landlord can be risky for the property owner damage or a complete loss due to negligence or tenant misbehavior is an ongoing worry squatting situations can also arise without adequately monitoring and the eviction of tenants can be problematic landlord rights and responsibilitieslandlords have specific rights and responsibilities that vary from state to state however there are general laws common to all states property owners also have the right to collect rent as well as any prearranged late fees they also have the right to raise the rent as defined in the tenant landlord lease agreement when tenants do not pay rent landlords have the right to evict them the process of eviction also varies from state to state most states provide landlords with the ability to collect back rent as well as legal costs 1in 2019 oregon became the first state to implement statewide rent control placing a limit on rent increases and limiting a landlords ability to remove tenants without cause 2property owners must the landlord must also follow all local building codes perform prompt repairs and keep all vital services including plumbing electricity and heat in working order 3security deposit management is also a critical obligation for any landlord while landlords have the right to charge tenants a security deposit to cover both property damage as well as unpaid rent the deposit does not ever actually belong to the landlord rules and laws governing security deposit amounts and how they must be maintained these rules vary from state to state landlords who breach these laws could face legal consequences 4types of landlordsjust as the types of properties a landlord can own can vary so too do the types of landlords they may be individuals corporations or other entities such as government agencies individuals may own one or more properties and rent them out to supplement their incomes or as a way to diversify their investment portfolios for instance a middle aged couple may decide to purchase a second home and rent it out as a way to increase their monthly income keeping the property rented out during retirement can help these individuals supplement any money they receive from social security benefits or other investments other landlords such as corporations may actually be in the business of purchasing properties for the express purpose to rent them out for example a real estate corporation may purchase office buildings and rent them out to different businesses for monthly rent municipal governments especially those in large cities often own housing corporations these agencies own rent out manage and maintain affordable or subsidized housing rentals to those in need rental payments are commonly determined based on a tenant s income for these dwellings 5advantages and disadvantages of being a landlordlandlords have financial advantages and disadvantages when investing in a rental property among the benefits a landlord may leverage borrowed funds to purchase a rental property thereby needing a smaller portion of the total property cost to gain the rental income from the structure the rental property can secure this debt freeing up other assets belonging to the landlord use of leverage to purchase the propertytax deductible costsincome streampotential for appreciationvarious responsibilities of maintaining and managing the propertytaxes on capital gainstenant related hasslesunforeseen costsunique legal liabilitiesmost costs associated with rental properties are tax deductible if there is no net profit after expenses rental income is essentially un taxed income as the rental property mortgage is paid down landlords increase their ownership percentage of their property and gain access to the appreciation of value however when a landlord sells a property they will pay taxes on any capital gains unless they roll over the money into another rental property this process called a 1031 exchange has specific requirements the new property must be identified within 45 days of the sale and the full transfer must take place within 180 days 6limits on a landlord s rightsthere are four main things landlords aren t allowed to do discriminate thanks to the fair housing act the law strictly forbids landlords from denying a lease to someone based on race color national origin sexual orientation familial status disability or gender 7enter without proper notice unless it s for an emergency situation such as a fire or leak landlords must give proper notice before entering a property laws vary by state but many statutes require at least 24 hour notice evict tenants improperly a landlord may evict a tenant for several reasons but they must always go through the proper legal channels failure to follow proper protocol puts the landlord in a precarious legal position raise rents without notice landlords must give ample notice before increasing a tenant s rent typically that means a minimum of 30 days and depending on the state rent control laws might prevent landlords from raising rents above a certain limit even when the lease is up for renewal | |
how much notice does a landlord have to give a tenant to move out | in most states landlords must give a tenant 30 days notice to end a month to month lease | |
how long does a landlord have to make repairs | landlord tenant laws vary from state to state but generally speaking a landlord has three to seven days to fix critical issues such as no heat or running water and 30 days for less serious problems | |
how do i report a landlord for negligence | in most cases you must first notify the landlord of any issue s before you file a complaint if there is no response or the landlord doesn t rectify the situation you may file a complaint with | |
what is a lapping scheme | a lapping scheme is a fraudulent practice that involves an employee altering accounts receivables to hide stolen cash the method involves taking a subsequent receivables payment from a transaction for example a sale and using that to cover the theft the receivable from the second transaction is covered by money from the third transaction and so on | |
how to detect lapping schemes | a lapping scheme can be detected by tracing how cash receipts have been applied to customer accounts if there is evidence that cash receipts are routinely being applied to the wrong customer accounts then there is likely an active lapping scheme in progress another indicator of a lapping scheme is an employee who refuses to take the vacation time they ve earned this is because lapping requires that the lapper the individual engaged in the fraud is involved every day and so is unable to take any vacation time one telltale sign of lapping is a rise in the aging of accounts receivable a lapping scheme can only temporarily hide the theft sooner or later the shortfall will show up and have to be recorded as a loss lapping schemes typically happen in smaller companies where only one person may handle cash receipts and customer billing | |
how to prevent lapping schemes | companies can prevent lapping schemes by doing the following example of a lapping schemesuppose that a company receives 150 for payment but an accounting clerk diverts that to a personal account to hide the theft the clerk will apply the second receivable to come in for example in the amount of 200 to the first receivable that leaves 50 leftover to be applied to the second receivable and 150 of it still to be paid the clerk continues allocating lapping money from successive sales to the preceding receivables so the store s accounting records fail to reveal the discrepancy | |
what is a lapse | a lapse is the removal or expiration of a privilege right or policy due to the passage of time or some sort of inaction a lapse of a privilege due to inaction occurs when the party that is to receive the benefit does not fulfill the conditions or requirements set forth by a contract or agreement | |
when an insurance policy lapses it usually occurs because one party fails to act on its obligations or one of the terms on the policy is breached an insurance policy will lapse if the holder does not pay the premiums for example similarly in derivatives trading the right given by an options contract will lapse when the option reaches maturity at which time the holder will no longer possess the right to buy or sell the underlying asset | understanding lapses | |
when something has lapsed the benefits and everything stated in the lapsed contract or agreement no longer remain active | lapse is most often used in the context of insurance where the term implies a lapse in coverage a direct translation of how a lapsed policy no longer confers benefits or provides coverage lapsing can also occur in other contexts lapsed insurance policies | |
when policyholders stop paying premiums and when the account value of the insurance policy has already been exhausted the policy lapses a policy does not lapse each and every time a premium payment is missed insurers are legally bound to give a grace period to policyholders before the policy falls into a lapse the grace period is usually 30 days insurers provide policyholders a period of 30 days to pay for the missed premium deadline | whole life variable universal life and universal life ul insurance policies use existing cash values of policies if payments are missed if policyholders still do not pay within the grace period a policy may use its own account value to pay for the unpaid premiums if the account value is not sufficient to pay for the policyholder s premiums then the policy will be considered lapsed once a policy lapses the insurer is not under any legal obligation to provide the benefits stated in the policy term life insurance does not have this benefit because it does not gain cash value in this case when premium payments are missed the policy goes straight to the grace period and then falls into a lapse when the grace period is over most insurers offer policyholders the benefit of reinstating a policy during a grace period the requirements for reinstating a policy depend on the time that the policy has lapsed for example insurers do not require documentation or proof of health if the policyholder wants to reinstate a policy within 30 days after it lapsed documentation regarding health and finances may be required in cases where the lapsed period for a policy is between 30 days and six months any period longer than six months and up to five years would be dependent on the insurance company consequences of lapsed car insurancemost states require drivers to have auto insurance the consequences of driving without insurance can be great even for those who can prove they have adequate finances to cover damages without insurance assets such as personal finances and real estate are at risk auto policies can lapse for various reasons such as missed premium payments or too many driving infractions policyholders with lapsed policies are considered a higher risk for the insurance company if a policy lapses because of accidents or driving violations it is likely that these activities will continue with the new insurer also missed premiums compromise the insurer s ability to properly cover losses because of the increased risk to the insurer premium rates increase for policyholders with lapsed coverage for some they may be deemed uninsurable requiring them to obtain coverage from low rated insurers the longer the lapse in coverage the higher the rate will be some states impose penalties for lapsed coverage for example alabama will suspend the driver s license and impose a 200 license reinstatement fee if caught driving without insurance or without the minimum state limits the driver could be required to obtain a court ordered sr 22 certificate of financial responsibility filed by the insurer because the sr 22 indicates a poor driving history the insurance company will likely apply a higher rate for assuming the risk of insuring the driver lapses in shares of stocksstock shares or stock options are sometimes granted to employees as a form of incentive compensation these normally come with a restriction that stops employees from selling or trading shares for a particular period of time these restrictions vary between companies and are mostly dependent on the vesting period or the duration of time that the employee has spent with the company when the restrictions are lifted employees become direct owners of the shares if the employee or grantee does not exercise the stock option within the specified time the options lapse 1 in other words the granted shares of stock are forfeited by the employee and return to the grantor or employer for example an employer grants employees with 10 years of service the option to purchase 100 shares of stock at 20 per share this option must be executed within 6 months some employees do not exercise their option to purchase shares within 6 months therefore their option to purchase shares of stock lapses example of a lapselet s say that sam has a term life insurance policy with a 1 million death benefit that requires payment of a 100 monthly premium for a period of 10 years for the first two years of the policy sam makes the monthly payments for the policy as required after two years however sam is laid off and can no longer afford to make the payments the grace period on the policy is 30 days over but sam still cannot pay the premiums due as a result the policy lapses if sam were to pass away at this point there would be no insurance coverage a lapse ratio or expiration ratio is a measure of policies issued by an insurance company that are not renewed compared to the number of policies that were active at the beginning of that same period the ratio serves as an important indicator in the insurance industry because it reveals how efficient a company is at retaining its customers and earnings shortly thereafter sam finds another job and requests that the insurance company reinstate the policy the insurer agrees and sam resumes paying the premiums thus restoring the lapsed coverage lapse faqsas of 2018 the lapse rate for individual life insurance policies was 4 7 and for group policies was 5 2a lapse in auto coverage generally results in higher rates being applied the longer the lapse the higher the rate for example drivers with policies that have lapsed for up to 30 days see an 8 increase in auto insurance rates 3 for those with lapses greater than 30 days the rate increase is about 35 most policies lapse without affecting credit however if the policyholder owes the insurer for coverage the insurer may report the debt to a collection agency 4 under those circumstances the lapse can precipitate a decrease in the policyholder s credit score the bottom linea lapse in coverage can occur for many reasons with the most common being missed premium payments lapses translate into higher risks for insurers and as a result higher rates for policyholders if facing a possible lapse in coverage contact your insurer to see what options are available to prevent it | |
what does large cap big cap mean | large cap sometimes called big cap refers to a company with a market capitalization value of more than 10 billion large cap is a shortened version of the term large market capitalization market capitalization is calculated by multiplying the number of a company s shares outstanding by its stock price per share a company s stock is generally classified as large cap mid cap small cap or micro cap 1large cap big cap explainedlarge cap stocks represent approximately 98 5 of the total u s equities market as measured by the wilshire 5000 total market index which only includes companies with a minimum of 25 million float adjusted market cap as of april 30 2021 the index has over 3 500 stocks representing the entire u s equity market universe 234as of march 2021 the top u s stocks by market cap included the following globally large cap companies are usually found in the market s leading benchmark indexes in the u s these indexes include the s p 500 the dow jones industrial average and the nasdaq composite since large cap stocks represent a significant portion of the u s equity market they are often utilized as core portfolio investments characteristics often associated with large cap stocks include the following 1 transparent large cap companies are typically transparent making it easy for investors to find and analyze public information about them 2 dividend payers large cap stable established companies are often the companies investors choose for dividend income distributions their mature market establishment has allowed them to establish and commit to high dividend payout ratios 3 stable and impactful large cap stocks are typically blue chip companies at peak business cycle phases generating established and stable revenue and earnings they tend to move with the market economy because of their size they are also market leaders they produce innovative solutions often with global market operations and market news about these companies is typically impactful to the broad market overall market capitalizationmarket capitalization describes the market size of a company market capitalization is an equity market segregation used broadly in the investment industry a company s market capitalization is an important characteristic considered by investment companies and individual investors market capitalization is one characteristic of a company used in investment analysis market capitalization is usually used in conjunction with other stock characteristics such as price to earnings and earnings growth estimates it is also an indicator of a company s market depth market capitalization is calculated by multiplying the number of shares outstanding by the share price of the company s stock 1 the number of shares outstanding is reported on a quarterly basis but the price of the stock can change from minute to minute therefore the market capitalization value is actively changing with the market price for example a company with 10 billion shares outstanding trading at 10 per share has a market capitalization of 100 billion likewise a company with 100 billion shares outstanding and trading at a price of 1 also has a market capitalization of 100 billion publicly traded stock issuance is used as a capital raising mechanism for publicly traded companies when a company chooses to offer its shares for trading on the open public market it typically uses share issuance as its primary equity capital raising tool thus equity share management is a primary function used by well established companies for capital and shares outstanding are a part of that management process market capitalization categoriestypically stocks are lumped into three main categories of capitalization large cap mid cap and small cap however mega cap and micro cap stock segregation may also be used mega cap refers to stocks with a market cap of greater than 200 billion micro cap is less than 300 million and nano cap may also be used for less than 50 million 6a large cap company has a market capitalization of over 10 billion a mid cap company has a market capitalization between 2 billion and 10 billion and a small cap company has less than 2 billion in market capitalization 1 large cap companies usually have broader market issuance experience with greater access to the capital markets usually large caps have the greatest trading liquidity investing in large cap stocksinvestors like to diversify their portfolios by investing in companies in different industries with varying market caps revenues and earnings growth projections due to their size large cap stocks are generally believed to be safer while they do not offer the same growth opportunities as emerging mid cap and small cap companies large cap companies are innovative market leaders as a result their stock price can gain significantly through specific market initiatives or around groundbreaking market solutions typically investing in large cap companies is used as a core long term investment strategy within a portfolio because of their stability and dividends financial advisers usually suggest diversifying an investment portfolio by including small cap mid cap and large cap stocks allocations and investment decisions are typically based on risk tolerance and investment horizons | |
what does large cap big cap mean | large cap sometimes called big cap refers to a company with a market capitalization value of more than 10 billion large cap is a shortened version of the term large market capitalization market capitalization is calculated by multiplying the number of a company s shares outstanding by its stock price per share a company s stock is generally classified as large cap mid cap small cap or micro cap 1large cap big cap explainedlarge cap stocks represent approximately 98 5 of the total u s equities market as measured by the wilshire 5000 total market index which only includes companies with a minimum of 25 million float adjusted market cap as of april 30 2021 the index has over 3 500 stocks representing the entire u s equity market universe 234as of march 2021 the top u s stocks by market cap included the following globally large cap companies are usually found in the market s leading benchmark indexes in the u s these indexes include the s p 500 the dow jones industrial average and the nasdaq composite since large cap stocks represent a significant portion of the u s equity market they are often utilized as core portfolio investments characteristics often associated with large cap stocks include the following 1 transparent large cap companies are typically transparent making it easy for investors to find and analyze public information about them 2 dividend payers large cap stable established companies are often the companies investors choose for dividend income distributions their mature market establishment has allowed them to establish and commit to high dividend payout ratios 3 stable and impactful large cap stocks are typically blue chip companies at peak business cycle phases generating established and stable revenue and earnings they tend to move with the market economy because of their size they are also market leaders they produce innovative solutions often with global market operations and market news about these companies is typically impactful to the broad market overall market capitalizationmarket capitalization describes the market size of a company market capitalization is an equity market segregation used broadly in the investment industry a company s market capitalization is an important characteristic considered by investment companies and individual investors market capitalization is one characteristic of a company used in investment analysis market capitalization is usually used in conjunction with other stock characteristics such as price to earnings and earnings growth estimates it is also an indicator of a company s market depth market capitalization is calculated by multiplying the number of shares outstanding by the share price of the company s stock 1 the number of shares outstanding is reported on a quarterly basis but the price of the stock can change from minute to minute therefore the market capitalization value is actively changing with the market price for example a company with 10 billion shares outstanding trading at 10 per share has a market capitalization of 100 billion likewise a company with 100 billion shares outstanding and trading at a price of 1 also has a market capitalization of 100 billion publicly traded stock issuance is used as a capital raising mechanism for publicly traded companies when a company chooses to offer its shares for trading on the open public market it typically uses share issuance as its primary equity capital raising tool thus equity share management is a primary function used by well established companies for capital and shares outstanding are a part of that management process market capitalization categoriestypically stocks are lumped into three main categories of capitalization large cap mid cap and small cap however mega cap and micro cap stock segregation may also be used mega cap refers to stocks with a market cap of greater than 200 billion micro cap is less than 300 million and nano cap may also be used for less than 50 million 6a large cap company has a market capitalization of over 10 billion a mid cap company has a market capitalization between 2 billion and 10 billion and a small cap company has less than 2 billion in market capitalization 1 large cap companies usually have broader market issuance experience with greater access to the capital markets usually large caps have the greatest trading liquidity investing in large cap stocksinvestors like to diversify their portfolios by investing in companies in different industries with varying market caps revenues and earnings growth projections due to their size large cap stocks are generally believed to be safer while they do not offer the same growth opportunities as emerging mid cap and small cap companies large cap companies are innovative market leaders as a result their stock price can gain significantly through specific market initiatives or around groundbreaking market solutions typically investing in large cap companies is used as a core long term investment strategy within a portfolio because of their stability and dividends financial advisers usually suggest diversifying an investment portfolio by including small cap mid cap and large cap stocks allocations and investment decisions are typically based on risk tolerance and investment horizons | |
larry ellison co founded the software giant oracle corp orcl in 1977 under his leadership oracle grew from a start up with three programmers into the largest database software supplier and the second largest supplier of business applications | oracle s rapid growth under ellison s leadership relied on his impressive track record in identifying and conquering new markets oracle also grew by acquiring other software companies including sun microsystems for 7 4 billion in 2010 and netsuite for 9 3 billion in 2016 12 since relinquishing the ceo post in 2014 ellison has served as chair of the board and chief technology officer alison czinkota investopediaearly life and educationborn in new york city in 1944 to an unmarried teenage mother ellison was adopted by his mother s aunt and uncle who raised him in chicago s south side after dropping out of the university of illinois and the university of chicago without a degree ellison spent almost a decade writing computer code for clients including tech companies ampex and amdahl where he worked on the first ibm compatible mainframe system notable accomplishmentsthe idea that launched oracle came to ellison while reading about relational databases in an ibm research paper that proposed a new way of organizing large volumes of data to make the information easy to access although ibm had not yet taken the idea out of the research stage ellison immediately saw the enormous commercial potential of relational databases to transform how enterprises operate 4in 1977 ellison and his former ampex colleagues bob miner and ed oates used 2 000 of their own money to found software development laboratories which later became oracle over the next two years ellison and his team built the first commercial structured query language sql for managing large relational databases 5key to their early success was winning a 50 000 contract from the u s central intelligence agency cia in 1978 to develop a relational database management system rdbms a project code named oracle when oracle 2 the first commercial relational database was released in 1979 the cia was among the earliest customers in renaming software development laboratories in 1983 ellison took the oracle name from this early contract for the cia 5after taking oracle public in 1986 ellison navigated the company through major turmoil including its first quarterly loss in 1990 and revelations about deceptive sales accounting that sank the share price the outlook improved in 1992 with the release of popular database software called oracle 7 which won over the market banks corporations governments airlines automakers and retailers all depended on oracle 7 despite the dot com bubble burst in the late 90s oracle s stock prices more than tripled from 1999 to the end of 2007 then continued climbing through the great financial crisis and the covid 19 pandemic 6another driver of oracle s growth under ellison s leadership was the series of strategic software acquisitions that allowed the company to enter new markets sun microsystems information technology hyperion solutions business intelligence retek retail siebel systems customer relationship management and peoplesoft human resources financial supply chain enterprise performance customer relationship management by 2020 ellison had positioned oracle s network architecture to handle the explosive growth of cloud based enterprise tech companies during the early days of the covid 19 pandemic lockdown in april 2020 zoom video communications inc zm the enterprise video communications leader chose oracle cloud infrastructure to support the increased demand for its services 7ellison has a record of outmaneuvering rivals by identifying and cornering new markets they overlooked in the 1980s when ibm began to develop sql software to compete with oracle he took advantage of the fact that the sql products that ibm was developing worked only with ibm servers ellison prioritized the emerging market for relational database systems that would run on any of the new computers targeting business and government users ellison was also one of the first to anticipate the revolutionary impact that the internet would have on the business world starting in 1997 ellison began to focus oracle exclusively on essential business software platforms for the internet it was a strategy that risked alienating customers unprepared for the shift yet it positioned the company to profit from the dot com boom by 2000 oracle was one of the biggest names in silicon valley and ellison briefly supplanted bill gates as the world s richest person | |
why is larry ellison a business legend | after dropping out of two universities in the 1960s ellison founded a company in 1977 that would later become oracle under his leadership oracle has grown into a mammoth firm that employs over 135 000 people and boasted annual revenues of 40 billion in 2021 8 in addition to driving the massive growth of his company since its founding ellison has defined how the global business sector uses big data by developing and launching products used by all of the 100 largest public companies worldwide and by 430 000 customers in 175 countries 9 | |
what is larry ellison s net worth | as of may 4 2022 ellison ranked 11th on the list of the wealthiest people in the world with a net worth of 124 billion according to bloomberg 3 ellison is known for extravagant spending including buying 98 of the hawaiian island of lanai spending 194 million on a yacht and investing hundreds of millions of dollars in luxury real estate in malibu california he also built a california estate modeled after 16th century japanese feudal architecture 1011 | |
what is last in first out lifo | last in first out lifo is a method used to account for business inventory that records the most recently produced items in a series as the ones that are sold first that is the cost of the most recent products purchased or produced is the first to be expensed as cost of goods sold cogs while the cost of older products which is often lower will be reported as inventory two alternative methods of inventory costing include first in first out fifo in which the oldest inventory items are recorded as sold first and the average cost method which takes the weighted average of all units available for sale during the accounting period and uses that average cost to determine cogs and ending inventory understanding last in first out lifo last in first out lifo is only used in the united states where any of the three inventory costing methods can be used under generally accepted accounting principles gaap the international financial reporting standards ifrs which is used in most countries forbids the use of the lifo method most companies that use lifo inventory valuations need to maintain large inventories such as retailers and auto dealerships the method allows them to take advantage of lower taxable income and higher cash flow when their expenses are rising most u s public companies prefer to use fifo 1 if a company uses a lifo valuation when it files taxes it must also use lifo when it reports financial results to its shareholders which lowers its net income 23lifo inflation and net income | |
when there is zero inflation all three inventory costing methods produce the same result but if inflation is high the choice of accounting method can dramatically affect valuation ratios fifo lifo and average cost have different impacts | in times of deflation the complete opposite of the above is true example of lifoassume company a has 10 widgets the first five widgets cost 100 each and arrived two days ago the last five widgets cost 200 each and arrived one day ago based on the lifo method of inventory management the last widgets in are the first ones to be sold seven widgets are sold but how much can the accountant record as a cost each widget has the same sales price so revenue is the same but the cost of the widgets is based on the inventory method selected based on the lifo method the last inventory in is the first inventory sold this means the widgets that cost 200 sold first the company then sold two more of the 100 widgets in total the cost of the widgets under the lifo method is 1 200 or five at 200 and two at 100 in contrast using the fifo method the 100 widgets are sold first followed by the 200 widgets so the cost of the widgets sold will be recorded as 900 or five at 100 and two at 200 this is why lifo creates higher costs and lowers net income in times of inflation it also reduces taxable income 4in periods of deflation lifo creates lower costs and increases net income which also increases taxable income | |
which is better lifo or fifo | that depends on the business you re in and whether you run a public company the lifo method decreases net income on paper that reduces the taxes you owe assuming that inflation is at work if you re running a public company lower earnings may not impress your shareholders most companies that use lifo are those that are forced to maintain a large amount of inventory at all times by offsetting sales income with their highest purchase prices they produce less taxable income on paper | |
which is easier lifo or fifo | they don t differ in complexity you can find an online calculator for either or both from sites like the omni calculator | |
why is lifo accounting banned in most of the world | lifo is banned under the international financial reporting standards that are used by most of the world because it minimizes taxable income that only occurs when inflation is a factor but governments still don t like it it also can make a company s inventory valuations inaccurate in addition there is the risk that the earnings of a company that is being liquidated can be artificially inflated by the use of lifo accounting in previous years 56the bottom linemost companies use the first in first out fifo method of accounting to record their sales the last in first out lifo method is suited to particular businesses in particular times that is it is used primarily by businesses that must maintain large and costly inventories and it is useful only when inflation is rapidly pushing up their costs it allows them to record lower taxable income at times when higher prices are putting stress on their operations | |
what is the last mile | the last mile describes the short geographical segment of delivery of communication and media services or the delivery of products to customers located in dense areas last mile logistics tend to be complex and costly to providers of goods and services who deliver to these areas understanding the last miledelivery of telecommunications and media content is instantaneous and very fast for physical products to the perimeter of a densely populated area imagine a trunk line leading to the edge of a city or metropolitan area the branches and leaves must then spread out across the tightly packed buildings and streets to serve customers working and living there the edge of the city to the customer inside the city is the last mile communications and media providers inclusive of broadband cable satellite and wireless spend heavily to upgrade old delivery systems and build out new networks to ensure adequate bandwidth for consumers hungry for data and streaming capabilities on their televisions desktop computers and mobile devices it takes time for these service providers to implement technology solutions for the last mile problem due to the rapidly changing nature of technology these solutions are at risk of being obsolete or not state of the art upon completion last mile logisticslast mile logistics for product delivery have become a central focus for retailers in the e commerce era our instant gratification society demands fast delivery of products ordered online retailers that can achieve this at low or no cost to the customer have competitive advantages amazon utilizes third party services and its own fleet of vehicles to deliver packages to its customers over the last mile to compete other retailers are investing more in setting up distribution centers as close as possible to metropolitan zones and then contracting with ups usps fedex and local courier services to perform last mile delivery services in urban areas deliveries to retail stores restaurants and other merchants in a central business district often contribute to congestion and safety problems making the last mile even more challenging to execute the last mile problem and cryptocurrenciesthe last mile problem has reemerged in the past few years in the context of cryptocurrencies in particular the last mile in this case refers to when a cryptocurrency such as bitcoin is used in a cross border payment such as a remittance the recipient of the bitcoin must find a way to exchange it for local currency in order to use it thus while crypto transactions can provide a quick efficient and cost effective way of sending remittances the last mile problem still stands in the way in many less developed countries | |
what does last mile mean | last mile refers to the last stage in a process especially of a customer buying goods when it is used in the context of transportation supply chain manufacturing and retailing the last mile is used to describe the delivery of products as the last leg of transportation | |
why is there a last mile problem | in supply chain management the last mile describes the difficult last part of the transportation of packages from hubs to their final destinations some of the problems of last mile delivery include minimizing cost ensuring transparency increasing efficiency and improving infrastructure the very last part of the delivery process of a product from the last distribution center to the end customer tends to be the most difficult because it can be the most complicated and expensive | |
what is the last mile in terms of internet service | in internet industries the last mile refers to the final leg of the telecommunications networks that deliver telecommunication services to customers it is the portion of the telecommunications network chain that physically reaches the customer s premises | |
are the first mile and the last mile problems the same | the first mile problem is generally used in the context of public transit systems the first last mile is the distance between a traveler s origin or destination and a transit station reducing this distance is considered to be the solution to both the first mile and the last mile problem 1the bottom linethe last mile refers to the last stage in the delivery of media communication or physical goods to a consumer last mile logistics can be costly and require a significant amount of planning to be timely and efficient | |
what is the last trading day | the last trading day is the final day that a futures contract or other derivatives with an expiry date may trade or be closed out before the delivery of the underlying asset or cash settlement must occur at the end of the last trading day the contract holder must be prepared to accept delivery of the commodity or settle in cash if the position is not closed the same concept applies to options contracts the last trading day is the final chance to close the position otherwise the underlying will be delivered if applicable if the option is worthless then it does not need to be closed it will simply expire understanding the last trading daythe last trading day is the day before a derivative expires on the expiry date the derivative is no longer tradable and the settlement process begins assume the expiration date on an options contract is friday march 22 the last trading is thursday march 21 the last trading day is the final day that a futures contract can be traded or closed out 1 any contracts outstanding at the end of the last day trading day must be settled by delivery of the underlying physical asset exchange of financial instruments or by agreeing to a monetary settlement the specific agreements covering these potential outcomes are contained in the futures contract specifications and vary between securities in general most futures contracts result in an exchange of financial instruments or a cash settlement rather than a delivery of the physical commodity since most market participants are hedging or speculating the last trading day for an option is the day before the expiration date 4 holders of options on the expiry date will be required to deliver or receive the underlying if applicable options that are worthless will expire and don t need to be closed out if an option buyer is holding a position that is in the money itm they will receive shares and be required to put the capital and or margin to purchase short those shares the option seller will need to provide those shares for some derivative contracts trading is allowed on the expiry date up to a certain time of day in this case the last trading day is the expiry day 4last trading day informationtraders can find expiry dates in their derivative contract or by looking at various exchange websites for standard trade settlement details exchanges will have a web page that lists all of their futures and options contracts and their settlement dates and times some popular futures and options exchanges in north america include the last trading day is important for investors to note as it allows them to close out of the contract before expiration futures contracts also have several notice days which provide the investor with details on the approaching settlement notice days can vary by contract with the first notice day often three to five days before the last trading day if an investor s contract position is not closed before the last trading day then they will be expected to proceed with delivery subsequently they will receive delivery notices and be required to arrange for the final delivery of the underlying assets example of the last trading day in a futures contractsuppose that a speculative futures trader purchases a gold futures contract with an expiration date of aug 27 2021 which has a last trading day of aug 26 2021 if the trader doesn t sell the contract by the end of the day on aug 26 the contract must be settled by delivery of the underlying asset most contracts also include a cash settlement option that relieves the two parties from the physical exchange or delivery of the underlying assets on the other hand suppose a food production company purchases orange juice futures contracts with an expiry date of july 13 2021 they may choose to take physical delivery of the orange juice since they can package it and sell it to customers or stores after expiration the production company would receive a delivery notice and be required to make arrangements for receipt of the orange juice if they did not want to take physical delivery then they would need to close the position on the last trading day which in this case is july 12 2021 | |
what is last twelve months ltm | last twelve months ltm refers to the timeframe of the immediately preceding 12 months it is also commonly designated as trailing twelve months ttm ltm is often used in reference to a financial metric used to evaluate a company s performance such as revenues or debt to equity d e although a 12 month period is a relatively short time span for examining company performance it is considered useful because it indicates a company s most recent performance and is indicative of the company s current state the terms last twelve months or trailing twelve months frequently appear in a company s earnings reports or other financial statements understanding last twelve months ltm while in some respects 12 months of data is less than adequate for investment evaluations it is a long enough span of time to level out annual seasonal factors possible short term price fluctuations and some market swings last twelve month figures provide updated metrics from the typical annual and quarterly figures reported by company management in reviewing figures shown as last twelve months or trailing twelve months investors should not assume the figures necessarily coincide with a company s most recent fiscal year in company financial statements which are typically filed at the company s fiscal year end the last twelve month figures refer to the 12 month period ending on the last date of the month the financial statement is dated such as june 30 or december 31 for example in a financial statement dated march 2015 last twelve month figures cover the period of time from april 1 2014 through march 31 2015 using the last twelve months metricsin addition to being used to gauge the recent trend of a given company s performance the last twelve month financial metrics are also frequently used to compare the relative performance of similar companies within an industry or sector financial metrics commonly considered by looking at last twelve month figures include a company s price earnings p e ratio and earnings per share eps in reviewing stocks mutual funds and exchange traded funds etfs the dividend yield figure for the last twelve months is often compared with the sec yield figure which reflects only the yield of the most recently paid dividend another instance where the last twelve months figures are useful is when a company is being considered for acquisition to arrive at a more accurate current value of a company last twelve months figures are often preferable to the most recent fiscal year figures | |
what is a last will and testament | a last will and testament is a legal document that communicates a person s final wishes pertaining to their assets it provides specific instructions about what to do with their possessions it will indicate whether the deceased leaves them to another person a group or wishes to donate them to charity a last will and testament can also handle matters involving dependents the management of accounts and financial interests some states allow for non standard or unusual wills such as a holographic will while others do not | |
how a last will and testament works | a will and last testament directs the disposition of your assets such as bank balances property or prized possessions it will detail who is to receive property and in what amount it can establish guardian arrangements for surviving dependents if you have a business or investments your will can specify who will receive those assets and when a will also allows you to direct assets to a charity or charities or to an institution or an organization a person writes a will while living its instructions are only carried out once the individual dies a will names an executor of the will that person is responsible for administering the estate a probate court usually supervises the executor to ensure that the wishes specified in the will are carried out a will and last testament can form the foundation of an estate plan and is the key instrument used to ensure that the estate is settled in the manner desired by the deceased while there can be more to an estate plan than just a will the will is the presiding document that a probate court uses to guide the settling of an estate any assets that have designated beneficiaries such as a life insurance policy qualified retirement plan or brokerage account are not included as probate assets and pass directly to the beneficiaries while many people obtain assistance with their wills from a lawyer this is not necessary to make most wills legal and binding | |
what a will doesn t do | there are several situations after death for which a will isn t useful any property that your will directs should go to certain beneficiaries whether people or organizations most likely will be tied up in probate court for months before it can be distributed according to your wishes in addition to time and effort the probate process involves legal fees relating to a lawyer the executor and the court a will shouldn t contain directions for funeral arrangements that s because normally it won t be reviewed for some time after death be sure to leave instructions for funeral arrangements in a separate document that s easily accessed by the executor or a family member gifts that you bestow through a will can t come with strings attached in certain cases for instance they can t be contingent on the marriage of a recipient a will doesn t allow you to reduce or avoid taxes that will be owed on your estate pets can t own property so if your dog cat or other pet is important to you you can consider leaving them to a trusted individual who will provide them with a loving home or find one for them your will can provide that person with money to help them care for your pet s to provide long term care for a loved one with special needs it s best to set up a special needs trust the trust can direct the care and provide ongoing income without affecting the benefits they can also receive through government programs 1addenda to the will such as a power of attorney or a medical directive can direct the court on how to handle matters if a person becomes physically or mentally incapacitated last will and testament requirementsa valid will requires that you be over the age of majority understand what property you have and what it means to leave property to others after your death a will requires you to identify the assets and property that are to be bequeathed as well as the identities of the intended recipients known as named beneficiaries a will should designate an executor to carry out the will s instructions according to the wishes of the deceased 2parents of minor children can also designate a legal guardian in their wills to care for them for a will to be considered valid it must be signed many jurisdictions also require that the signing of a will be witnessed by at least two unrelated individuals age 18 or over check your state laws for this information types of willsthe four main types of wills are the simple will the joint will the testamentary trust will and the living will use a simple will to list your assets and the beneficiaries who should receive them you can also designate the executor and a guardian for any minor children a simple will is one that can be done easily online using one of various templates be sure to get any legal advice you feel you need a joint will is one document that involves two people generally spouses when one dies the will is executed in favor of the other spouse as defined in the will the provisions can t be changed by the surviving spouse which can be a problem if that spouse s circumstances change joint wills aren t as common as they once were because of this inflexibility this will contains one or more testamentary trusts that take effect after your death and the probate process unlike for example a living trust which takes effect during your lifetime it is used in instances where beneficiaries such as minor children and or those with special needs need specific care over a long period of time the trust distributes all or a portion of your assets after you pass this type of will only concerns your medical care and decision making should you become incapacitated it is a legal document that provides instructions for your care and among other things the termination of medical support 3it does not deal with a distribution of your property to beneficiaries or other such final wishes you don t need a lawyer to create a legally recognized and accepted living will in fact medical facilities or your state government can provide living will forms to you each state has specific legal requirements for valid living wills be sure that you understand them before creating one 4wills vs trustswills and trusts are both important estate planning tools but they differ in important ways trusts are legal entities created by individuals known as grantors also known as trustors or settlors that are assigned assets and instruct in the disposition of those assets a trustee is designated by the trust document to manage and distribute those assets to beneficiaries according to the wishes of the grantor as detailed in the document a trust can be created for a variety of functions and there are many types of trusts overall there are two categories living and testamentary a will can be used to create a testamentary trust you can also create a revocable living trust for the primary purpose of avoiding probate court a will becomes active only after one s death a trust on the other hand becomes active the day you create it trusts tend to be more expensive to create and maintain than wills importantly unlike wills trusts do not go through a probate process and are not usually a matter of public record a trust however can only deal with property or assets that are assigned to it | |
how to create a will | here are the steps to take to create a will creating a will can often be a simple and inexpensive process where you fill out a form online without the help of an estate planning attorney online will makers allow you to draft print and sign your last will and testament via an online or downloaded document creator this is a more cost effective way to establish will and trust documents compared to going to an attorney or in person legal service most online will makers walk users through a series of questions to populate the required fields there are important distinctions between a will and a trust unlike a will which can sometimes be written on one s own or using an online will maker trusts normally are created with the assistance of a qualified attorney consequences of not having a will | |
when a person dies without a valid will it is said that they have died intestate this means that the state becomes the executor of the estate it decides how to distribute the property and who receives payment first without consideration for a family s circumstances the court can even establish guardianship arrangements based on its determination of the best interests of the children | the probate laws in most states divide property among the surviving spouse and children of the deceased for example a resident of arizona new mexico california texas idaho nevada washington louisiana or wisconsin who dies without a valid will must have their estate divided according to the community property laws of the state community property laws recognize both spouses as joint property owners 5in effect the distribution hierarchy starts with the surviving spouse who almost invariably receives at least half the decedent s estate they may receive the entire estate if the decedent leaves no living children or grandchildren | |
where can i find a last will and testament maker online | investopedia has reviewed several top online will makers to suggest the best we ve taken into consideration ease of use availability in all states and the ability to update information easily | |
what is a codicil to a last will and testament | a codicil is an addendum of a will it is a separate document that references and amends the will codicils allow one to change add to or remove provisions in a will these changes can be made to keep a will and testament up to date especially as personal circumstances change over time codicils can only be created by the original creator of the will | |
what s the difference between a last will and testament and a living will | a living will does not have anything to do with the transfer of assets upon death also known as a healthcare directive this legal document allows an individual while they are alive and mentally capable to empower another person to make decisions about their medical care if the person signing the living will becomes incapacitated healthcare proxies can communicate with the patient s doctors to prevent unwanted treatments and make sound decisions on their behalf | |
how much does a last will and testament cost | cost depends on the nature of one s estate and how complex the process of designating beneficiaries may be a basic will can be drafted for free by an individual on their own online will makers range from tens to hundreds of dollars depending on scope hiring a lawyer can cost hundreds to thousands of dollars the bottom linea last will and testament is a fundamental legal document in an individual s estate plan it lays out a person s final wishes pertaining to their assets it provides specific instructions about how to distribute their possessions there are certain things a will cannot accomplish for a person such as help a family avoid probate or reduce estate taxes wills can be simple to create but have requirements that must be addressed in order for them to be considered valid please check your state laws regarding a last will and testament to be sure you take the right steps when creating yours | |
what is a late fee | a late fee is a charge that lenders and other companies impose on you when you fail to make an on time payment you may face late fees if you re late making payments on a loan a credit card or any other type of financial agreement such as an insurance policy or rental contract late fees are designed to encourage you to pay by the due date and should be specified in the contract or other agreement lenders must notify you about any changes to late fees in advance and in writing | |
how late fees work | lenders like credit card companies and other creditors make money in a variety of ways including by charging consumers various fees like late fees late fees are levied when you don t pay a bill by a certain date for instance if you fail to make your monthly credit card payment at least the minimum by the due date the card company may impose a late fee that will show up on your next statement or a landlord may charge a late fee if you don t pay rent on time all late fees must be explicitly described in credit card agreements leases or other types of contracts creditors legally can t charge excessive late fees what constitutes a reasonable fee is a matter of debate in most cases late fees typically range between 25 and 50 some creditors provide a grace period before they impose the late fee for instance your rent may be due on the first of every month but the landlord might allow you to pay rent by the 10th without incurring a late fee a grace period must be clearly stated in the lease agreement some creditors waive the late fee the first time you miss the payment deadline while others do not charge any late fees at all still other lenders offer no leniency and charge a late fee even if you just miss the payment deadline by a matter of minutes or hours late fees can increase your outstanding account balance for example a late fee may be added to the next month s credit card statement not only does that raise the balance by the amount of the late fee but you would then have to pay interest on the late fee as well missing a payment due date can also have a negative impact on your credit history and credit score that s because payment history plays a major role in credit scoring models making up about 35 of your fico score for example 1 so the more payments you miss the more you will pay in late fees and you can also expect your credit score to take a hit as late fees add to your balance your credit can be further impacted another part of your credit score is your credit utilization ratio the more credit you use the lower your credit score | |
how to avoid late fees and other penalties | you can often avoid late fees by arranging for your bills to be paid automatically from your bank account this depends of course on you having enough money in the account to cover the payment it s always a good idea to pay a credit card on time and in full each month to avoid interest charges but if you can t pay off the full balance making at least the minimum monthly payment on time will help you avoid a late fee in some cases late payments can also trigger other charges for example if your checking account does not have enough money to cover a credit card payment you can also incur a returned payment fee from the credit card issuer as well as a non sufficient funds nsf fee from the bank lenders may also review and raise interest rates based on payment history this is referred to as penalty repricing when that happens the lender will raise your interest rate to the penalty annual percentage rate apr described in the credit agreement which may be considerably higher late fees are just one of several types of fees banks and other companies charge consumers for instance credit card users can also be subject to annual fees balance transfer fees foreign transaction fees and returned payment fees these fees can be avoidable if you choose your credit card carefully because not all cards impose every fee you can also avoid fees by following the contract terms cracking down on junk feesthe consumer financial protection bureau cfpb announced in march 2024 that it would cap credit card late fees at 8 down from a typical fee of 32 it estimates this will lead to average savings of 220 a year for 45 million consumers who now pay late fees 2however the rule is opposed by banks and the u s chamber of commerce filed a lawsuit and a request for a preliminary injunction to keep it from taking effect it says the rule will cause financial institutions to pass along costs to consumers who have never paid late 3the cfpb has estimated that excessive credit card late fees total 12 billion each year 4under the credit card accountability responsibility and disclosure act of 2009 or the card act late fees must be reasonable and proportional to the costs that credit card issuers incur as a result of late payments but in february 2023 the cfpb report noted that late fees currently range as high as 41 and generate income that is about five times greater than the collection costs 5the cfpb has also reported on junk fees related to other types of borrowing some auto lenders it said illegally charged late fees that are more than what s stated in their loan agreements for example an auto loan servicer might assess a 25 late fee when the terms cap late fees at no more than 5 of the monthly payment amount even if the 25 late fee exceeds that 5 6in the case of mortgages the cfpb has reported that some servicers also charged late fees in excess of the amount spelled out in the mortgage terms the lenders even charged late fees after explicitly saying they would not 7student loan servicers had a different issue according to the cfpb their customer service representatives would sometimes accept a loan payment by credit card over the phone then reverse the payment after learning that the servicer did not accept credit card payments at that point the borrower would incur a late fee 8if you re charged a late fee check your contract to make sure it isn t higher than it should be frequently asked questions faqs | |
how much can a landlord charge a renter for paying late | the amount a landlord can charge a renter for paying late depends on the laws in the state some states impose no limits other than that the late fee be reasonable others limit it to some percentage of the rent a dollar figure or a combination of both 9 | |
how long do late payments stay on your credit report | late payments can remain on your credit reports for up to seven years payment history accounts for 25 of your fico score 1011 | |
does the internal revenue service charge late fees | the irs can impose what it calls a failure to pay penalty the penalty is 0 5 of the unpaid taxes for each month or part of a month the tax remains unpaid the penalty won t exceed 25 of your unpaid taxes the agency says 12the bottom linelate fees can be excessive and sometimes illegal to avoid them try to pay all of your bills on time you can enroll in automatic payments through your bank to help if you incur a late fee and you aren t habitually late with your payments the creditor may be willing to waive it | |
what is the law of demand | the law of demand is one of the most fundamental concepts in economics alongside the law of supply it explains how market economies allocate resources and determine the prices of goods and services the law of demand states that the quantity purchased varies inversely with price in other words the higher the price the lower the quantity demanded this occurs because of diminishing marginal utility 1 that is consumers use the first units of an economic good they purchase to serve their most urgent needs first then they use each additional unit of the good to serve successively lower valued ends 2understanding the law of demandeconomics involves the study of how people use limited means to satisfy unlimited wants the law of demand focuses on those unlimited wants naturally people prioritize more urgent wants and needs over less urgent ones in their economic behavior and this carries over into how people choose among the limited means available to them for any economic good the first unit of that good that a consumer gets their hands on will tend to be used to satisfy the most urgent need the consumer has that that good can satisfy for example consider a castaway on a desert island who obtains a six pack of bottled fresh water that washes up onshore the first bottle will be used to satisfy the castaway s most urgently felt need which is most likely drinking water to avoid dying of thirst the second bottle might be used for bathing to stave off disease an urgent but less immediate need the third bottle could be used for a less urgent need such as boiling some fish to have a hot meal and on down to the last bottle which the castaway uses for a relatively low priority such as watering a small potted plant to feel less alone on the island because each additional bottle of water is used for a successively less highly valued want or need by our castaway we can say that the castaway values each additional bottle less than the one before the more units of a good that consumers buy the less they are willing to pay in terms of price similarly when consumers purchase goods on the market each additional unit of any given good or service that they buy will be put to a less valued use than the one before so we can say that they value each additional unit less and less because they value each additional unit of the good less they aren t willing to pay as much for it by adding up all the units of a good that consumers are willing to buy at any given price we can describe a market demand curve which is always sloping downward like the one shown in the chart below each point on the curve a b c reflects the quantity demanded q at a given price p at point a for example the quantity demanded is low q1 and the price is high p1 at higher prices consumers demand less of the good and at lower prices they demand more 2demand vs quantity demandedin economic thinking it is important to understand the difference between the phenomenon of demand and the quantity demanded in the chart above the term demand refers to the light blue line plotted through a b and c it expresses the relationship between the urgency of consumer wants and the number of units of the economic good at hand a change in demand means a shift of the position or shape of this curve it reflects a change in the underlying pattern of consumer wants and needs vis vis the means available to satisfy them on the other hand the term quantity demanded refers to a point along the horizontal axis changes in the quantity demanded strictly reflect changes in the price without implying any change in the pattern of consumer preferences 3changes in quantity demanded just mean movement along the demand curve itself because of a change in price these two ideas are often conflated but this is a common error rising or falling prices don t decrease or increase demand they change the quantity demanded factors affecting demandso what does change demand the shape and position of the demand curve can be affected by several factors rising incomes tend to increase demand for normal economic goods as people are willing to spend more the availability of close substitute products that compete with a given economic good will tend to reduce demand for that good because they can satisfy the same kinds of consumer wants and needs conversely the availability of closely complementary goods will tend to increase demand for an economic good because the use of two goods together can be even more valuable to consumers than using them separately like peanut butter and jelly other factors such as future expectations changes in background environmental conditions or changes in the actual or perceived quality of a good can change the demand curve because they alter the pattern of consumer preferences for how the good can be used and how urgently it is needed 3law of supplysupply is the total amount of a specific good or service that is available to consumers at a certain price point as the supply of a product fluctuates so does the demand which directly affects the price of the product the law of supply then is a microeconomic law stating that all other factors being equal as the price of a good or service rises the quantity that suppliers offer will rise in turn and vice versa when demand exceeds the available supply the price of a product typically will rise conversely should the supply of an item increase while the demand remains the same the price will go down 4 | |
what is a simple explanation of the law of demand | the law of demand tells us that if more people want to buy something given a limited supply the price of that thing will be bid higher likewise the higher the price of a good the lower the quantity that will be purchased by consumers | |
why is the law of demand important | together with the law of supply the law of demand helps us understand why things are priced at the level that they are and to identify opportunities to buy what are perceived to be underpriced or sell overpriced products assets or securities for instance a firm may boost production in response to rising prices that have been spurred by a surge in demand can the law of demand be broken yes in certain cases an increase in demand doesn t affect prices in ways predicted by the law of demand for instance so called veblen goods are things for which demand increases as their price rises as they are perceived as status symbols similarly demand for giffen goods which in contrast to veblen goods aren t luxury items rises when the price goes up and falls when the price falls examples of giffen goods can include bread rice and wheat these tend to be common necessities and essential items with few good substitutes at the same price levels the bottom linethe law of demand posits that the price of an item and the quantity demanded have an inverse relationship essentially it tells us that people will buy more of something when its price falls and vice versa when graphed the law of demand appears as a line sloping downward this law is a fundamental principle of economics it helps to set prices understand why things are priced as they are and identify items that may be overpriced or underpriced | |
what is the law of diminishing marginal productivity | the law of diminishing marginal productivity is an economic principle usually considered by managers in productivity management generally it states that increasing an input in a production process for example labor hours will result in marginally smaller increases in output after the initial increase and may level off or even decrease after a specific point understanding the law of diminishing marginal productivitythe law of diminishing marginal productivity involves marginal increases in production resulting from an increase of an input employed it can also be known as the law of diminishing returns in general it aligns with most economic theories using marginal analysis such as the diminishing rate of satisfaction or utility obtained from additional units of consumption of a particular commodity the law of diminishing marginal productivity suggests that managers find a marginally diminishing rate of production per unit of an input employed in the production process if all other things remain the same when mathematically graphed this shows total production increasing at a decreasing rate as increasing units of an input are added to the production process different than some other economic laws the law of diminishing marginal productivity involves marginal product calculations that can usually be relatively easy to quantify companies may choose to alter various inputs in the factors of production for various reasons many of which are focused on costs in some situations it may be more cost efficient to alter the inputs of one variable while keeping others constant however in practice all changes to input variables require close analysis the law of diminishing marginal productivity says that these changes to inputs will have a marginally positive effect on outputs thus each additional unit produced will report a marginally smaller production return than the unit before it as production goes on the law of diminishing marginal productivity is also known as the law of diminishing marginal returns marginal productivity or marginal product refers to the extra output return or profit yielded per unit by advantages from production inputs inputs can include things like labor and raw materials the law of diminishing marginal returns states that when an advantage is gained in a factor of production the marginal productivity will typically diminish as production increases this means that the cost advantage usually diminishes for each additional unit of output produced | |
when reviewing production to cost inputs these calculations are important for businesses to consider | real world examplesin its most simplified form diminishing marginal productivity is typically identified when a single input variable presents a decrease in input cost a decrease in the labor costs involved with manufacturing a car for example would lead to marginal improvements in profitability per car however the law of diminishing marginal productivity suggests that for every unit of production managers will experience a diminishing productivity improvement this usually translates to a diminishing level of profitability per car diminishing marginal productivity can also involve a benefit threshold being exceeded for example consider a farmer using fertilizer as an input in the process for growing corn each unit of added fertilizer will only increase production return marginally up to a threshold at the threshold level the added fertilizer does not improve production and may harm production in another scenario consider a business with a high level of customer traffic during certain hours the business could increase the number of workers available to help customers but at a certain threshold the addition of workers will not improve total sales and can even cause a decrease in sales considerations for economies of scaleeconomies of scale can be studied in conjunction with the law of diminishing marginal productivity economies of scale show that a company can usually increase their profit per unit of production when they produce goods in mass quantities mass production involves several important factors of production like labor electricity equipment usage and more when these factors are adjusted economies of scale still allow a company to produce goods at a lower relative per unit cost however adjusting production inputs advantageously will usually result in diminishing marginal productivity because each advantageous adjustment can only offer so much of a benefit economic theory suggests that the benefit obtained is not constant per additional units produced but rather diminishes diminishing marginal productivity can also be associated with diseconomies of scale diminishing marginal productivity can potentially lead to a loss of profit after breaching a threshold if diseconomies of scale occur companies don t see a cost improvement per unit at all with production increases instead there is no return gained for units produced and losses can mount as more units are produced | |
what is the law of diminishing marginal returns | the law of diminishing marginal returns is a theory in economics that predicts that after some optimal level of capacity is reached adding an additional factor of production will actually result in smaller increases in output 1for example a factory employs workers to manufacture its products and at some point the company operates at an optimal level with all other production factors constant adding additional workers beyond this optimal level will result in less efficient operations the law of diminishing returns is related to the concept of diminishing marginal utility it can also be contrasted with economies of scale investopedia dennis madambaunderstanding the law of diminishing marginal returnsthe law of diminishing marginal returns is also referred to as the law of diminishing returns the principle of diminishing marginal productivity and the law of variable proportions this law affirms that the addition of a larger amount of one factor of production ceteris paribus inevitably yields decreased per unit incremental returns 1 the law does not imply that the additional unit decreases total production which is known as negative returns however this is commonly the result the law of diminishing marginal returns does not imply that the additional unit decreases total production but this is usually the result the law of diminishing returns is not only a fundamental principle of economics but it also plays a starring role in production theory production theory is the study of the economic process of converting inputs into outputs businesses analysts and financial loan providers will calculate the diminishing marginal returns to determine if production growth is beneficial history of the law of diminishing returnsthe idea of diminishing returns has ties to some of the world s earliest economists including jacques turgot johann heinrich von th nen thomas robert malthus david ricardo and james anderson the first recorded mention of diminishing returns came from turgot in the mid 1700s 2classical economists such as ricardo and malthus attribute successive diminishment of output to a decrease in the quality of input ricardo contributed to the development of the law referring to it as the intensive margin of cultivation ricardo was also the first to demonstrate how additional labor and capital added to a fixed piece of land would successively generate smaller output increases 3malthus introduced the idea during the construction of his population theory this theory argues that population grows geometrically while food production increases arithmetically resulting in a population outgrowing its food supply 4 malthus ideas about limited food production stem from diminishing returns neoclassical economists postulate that each unit of labor is exactly the same and diminishing returns are caused by a disruption of the entire production process as extra units of labor are added to a set amount of capital diminishing marginal returns vs returns to scalediminishing marginal returns are an effect of increasing input in the short run while at least one production variable is kept constant such as labor or capital returns to scale on the other hand are an impact of increasing input in all variables of production in the long run this phenomenon is referred to as economies of scale for example suppose that there is a manufacturer that is able to double its total input but gets only a 60 increase in total output this is an example of decreasing returns to scale now if the same manufacturer ends up doubling its total output then it has achieved constant returns to scale where the increase in output is proportional to the increase in production input however economies of scale will occur when the percentage increase in output is higher than the percentage increase in input so that by doubling inputs output triples | |
what is the law of diminishing marginal utility | the law of diminishing marginal utility states that all else equal as consumption increases the marginal utility derived from each additional unit declines marginal utility is the incremental increase in utility that results from the consumption of one additional unit utility is an economic term used to represent satisfaction or happiness in simple terms the law of diminishing marginal utility means that the more of an item that you use or consume the less satisfaction you get from each additional unit understanding the law of diminishing marginal utilityto understand how the law of diminishing marginal utility affects both consumers and businesses it can be helpful to break down its components utility is the degree of satisfaction or pleasure a consumer gets from an economic act for example when hungry a consumer can purchase a sandwich to eat so they are no longer hungry thus the sandwich provides some utility marginal utility is the enjoyment a consumer gets from each additional unit of consumption it calculates the utility beyond the first product consumed if you buy a bottle of water and then a second one the utility gained from the second bottle of water is the marginal utility the law of diminishing marginal utility directly relates to the concept of diminishing prices as the utility of a product decreases consumers are only willing to pay smaller dollar amounts for more of the product for example assume an individual pays 100 for a vacuum cleaner because they have little need for and therefore see less value in a second vacuum cleaner the same individual is willing to pay only 20 for it the marginal utility may decrease into negative utility at that point it s entirely unfavorable to consume another unit of any product therefore the first unit of consumption for any product is typically highest after that every unit of consumption to follow holds less and less utility consumers handle the law of diminishing marginal utility by consuming numerous different goods which keeps the utility for each one high the law of diminishing marginal utility makes several assumptions examples of the law of diminishing marginal utilityimagine you can purchase a slice of pizza for 2 you re very hungry so you decide to buy five slices when you eat the first slice of pizza you gain a certain amount of positive utility from eating because you were hungry and this is the first food you ve eaten lately the first slice has a large benefit after you eat the second slice of pizza your appetite is becoming satisfied you re not as hungry as before so you experience a smaller benefit and less enjoyment with the second slice than with the first the third slice holds even less utility since you re only a little hungry at this point with the fourth slice of pizza you experience a diminished marginal utility as well it might be difficult to eat because you re already full from the first three slices as for the fifth slice you can t even eat it you re so full from the first four slices that consuming the last slice of pizza would result in negative utility businesses can use this principle to structure their workforce for example a company may benefit from having three accountants on its staff but if there is no real need for a third hiring one results in a diminished utility due to the minimum benefit gained if you have two accountants but no one to process paperwork hiring a new administrative assistant has a higher level of utility than hiring a third accountant the law of diminishing marginal utility can also affect what goods and services businesses offer to customers as it encourages a certain level of diversification in the above example with the pizza if the consumer knows they won t want the fourth and fifth slices of pizza they might not buy them in the first place but they may see a high level of utility in a different food such as a salad by diversifying its menu the shop selling pizza can avoid diminished marginal utility and encourage consumers to purchase more the law of diminishing marginal utility directly impacts a company s pricing because the price charged for an item must correspond to the consumer s marginal utility and willingness to consume or utilize the good | |
how the law affects pricing | the law of diminishing marginal utility affects how businesses price their goods and services because the first quantity of something has the most utility consumers are usually willing to pay more for it for example a store might have a deal on backpacks for sale one backpack for 30 two for 55 or three pairs for 75 a person buying backpacks can get the best cost per backpack if they buy three not all buyers will want three backpacks even though they are the best deal however anyone who is shopping for backpacks needs at least one so the first backpack has the highest price after that because the marginal utility of each additional backpack decreases the business must decrease the cost per unit in order to entice shoppers to purchase more units limitations of the law of diminishing marginal utility | |
when it comes to making business decisions there are some limitations to the law of diminishing marginal utility the law will not operate properly or may not even apply if | the law of diminishing marginal utility also will not apply if the commodity being considered is money the utility of money does not decrease as a person acquires more of it 1 | |
what is a simple way to state the law of diminishing marginal utility | the law of diminishing marginal utility means that as you use or consume more of something you will get less satisfaction from each additional unit of that thing | |
what is the formula for the law of diminishing marginal utility | marginal utility mu is equal to the change in the total utility tu divided by the change in quantity consumed q this is written as mu tu q 2 | |
why is the law of diminishing marginal utility important | the law of diminishing marginal utility is important in economics and business because it predicts consumer behavior it can be used by businesses to find the balance in supply and production it can inform a business marketing and sales strategies as well the bottom linethe law of diminishing marginal utility predicts how consumers will react to a certain level of supply as they consume more units of a single type of good the utility of each unit will decrease until the consumer doesn t want anymore businesses can use the law of diminishing marginal utility to understand consumer behavior price their goods and services and diversify their offerings | |
what is the law of large numbers | the law of large numbers applies to probability and statistics it states that a sample size gets closer to the average of the whole population as it grows because the sample is more representative of the population as it becomes larger the law of large numbers indicates in a financial context that a large entity that s growing rapidly can t maintain that growth pace forever the biggest of the blue chips with market values in the hundreds of billions are frequently cited as examples of this phenomenon investopedia julie bangunderstanding the law of large numbersthe law of large numbers can be used in two ways the law of large numbers can be applied to a variety of subjects in statistical analysis it may not be feasible to poll every individual within a given population to collect the required amount of data but every additional data point gathered has the potential to increase the likelihood that the outcome is a true measure of the mean the law of large numbers doesn t mean that a given sample or group of successive samples will always reflect the true population characteristics if a given sample or series of samples deviates from the true population average especially for smaller samples nor does it guarantee that successive samples will move the observed average toward the population mean as suggested by the gambler s fallacy the term law of large numbers sometimes relates to growth rates in business it s stated as a percentage and suggests that the percentage rate of growth becomes increasingly difficult to maintain as a business expands this happens because the underlying dollar amount is increasing even if the growth rate as a percentage remains constant the law of large numbers isn t to be mistaken with the law of averages which states that the distribution of outcomes in a large or small sample reflects the distribution of outcomes of the population law of large numbers statistical analysis exampleyou re more likely to reach an accurate average in statistical analysis by choosing 20 data points instead of relying on just two if you want to determine the average value of a data set of 100 possible values there s a greater probability of the two data points being outliers or non representative of the average and there s a lower probability of all 20 data points being non representative you may determine the average to be approximately 67 5 if the data set includes all integers from one to 100 and you drew only two values such as 95 and 40 the average should shift toward the true average as you consider more data points if you continue to take random samplings up to 20 variables law of large numbers and central limit theoremthe law of large numbers is related to the central limit theorem in statistical analysis the central limit theorem states that the sample mean will be evenly distributed as the sample size increases this is often depicted as a bell shaped curve where the peak of the curve is the mean and even distributions of sample data fall to the left and right of the curve the law of large numbers also states that data is refined as the sample grows but the law of large numbers more closely relates to the center of the bell curve it indicates that the mean of the sample will more closely resemble the mean of the population as the sample size increases the law of large numbers therefore relates to the peak or mean of a curve the central limit theorem relates to the distribution of a curve law of large numbers and business growththe term law of large numbers is sometimes used colloquially in business and finance to refer to the observation that exponential growth rates often don t scale this isn t related to the law of large numbers but may be a result of the law of diminishing marginal returns or diseconomies of scale the same principles can be applied to other metrics such as market capitalization or net profit investing decisions can be guided based on the associated difficulties that companies with very high market capitalization can experience as they relate to stock appreciation this concept is somewhat central to growth versus value stocks because a company may use it to maintain its business strategy of rapid growth after it achieves market success law of large numbers business exampletesla reported automotive sales not gross sales of 24 604 million in fiscal year 2020 the company reported 44 125 million the next year an increase of roughly 79 1 electric vehicles are an emerging market and tesla was beginning to finally experience economies of scale experiencing success very quickly the law of large numbers indicates that it will become harder for tesla to maintain this level of productivity as the company continues to grow it becomes apparent that tesla simply can t maintain its current growth trajectory due to the underlying dollar values becoming unreasonable assuming a steady growth rate over several years law of large numbers and insurancethe law of large numbers is also prominent in the insurance industry it s used to calculate and refine projected risk imagine a situation where an insurance company is assessing how much to charge customers for car insurance the company won t be able to adequately determine appropriate risk profiles should it have a small data set the company experiences the law of large numbers as it collects more data it may soon find that young male drivers are most likely to cause an accident this larger sample becomes more representative of driving incidents and the insurance company can arrive at more accurate conclusions about the appropriate insurance premiums to charge the law of large numbers also allows insurance companies to deeply refine the criteria in which to assess premiums by analyzing what traits cause higher risk | |
why is the law of large numbers important | the law of large numbers is important in statistical analysis because it gives validity to your sample size the assumptions you make when working with a small amount of data may not appropriately translate to the actual population so it s important to make sure enough data points are being captured to adequately represent the entire data set the law of large numbers is important in business when setting targets or goals a company might double its revenue in a single year it will have earned the same amount of money each of the last two years should it obtain only 50 growth in revenue the next year percentages can be misleading as large dollar values escalate | |
how can companies overcome the challenge of the law of large numbers | companies often strive to overcome the challenge of the law of large numbers by acquiring smaller growth companies that can infuse scalable growth they also attempt to become more efficient and utilize their size for manufacturing ordering or distribution benefits companies can be more attentive to dollar goals rather than percentage goals | |
what is the law of small numbers | the law of small numbers is the theory that people underestimate the variability in small sample sizes they usually overestimate the population s value based on the incorrect sample size when the sample size is too small | |
what is the law of large numbers in psychology | the law of large numbers in psychology translates to how a larger number of trials often leads to a more accurate expected value the projection becomes closer to being a correct medical assessment as more trials are performed the bottom linemake sure you understand the law of large numbers to determine whether your sample size is representative of your population when you re analyzing a data set but be mindful of its size when you re analyzing a company the law of large numbers states that it will become more difficult for a company to maintain a percentage change in growth as it becomes larger due to the underlying large change in dollar amounts | |
what is the law of one price | the law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally regardless of location when certain factors are considered the law of one price takes into account a frictionless market where there are no transaction costs transportation costs or legal restrictions the currency exchange rates are the same and that there is no price manipulation by buyers or sellers the law of one price exists because differences between asset prices in different locations would eventually be eliminated due to the arbitrage opportunity the arbitrage opportunity would be achieved whereby a trader would purchase the asset in the market it is available at a lower price and then sell it in the market where it is available at a higher price over time market equilibrium forces would align the prices of the asset understanding the law of one pricethe law of one price is the foundation of purchasing power parity purchasing power parity states that the value of two currencies is equal when a basket of identical goods is priced the same in both countries it ensures that buyers have the same purchasing power across global markets in reality purchasing power parity is difficult to achieve due to various costs in trading and the inability to access markets for some individuals the formula for purchasing power parity is useful in that it can be applied to compare prices across markets that trade in different currencies as exchange rates can shift frequently the formula can be recalculated on a regular basis to identify mispricings across various international markets example of the law of one priceif the price of any economic good or security is inconsistent in two different free markets after considering the effects of currency exchange rates then to earn a profit an arbitrageur will purchase the asset in the cheaper market and sell it in the market where prices are higher when the law of one price holds arbitrage profits such as these will persist until the price converges across markets for example if a particular security is available for 10 in market a but is selling for the equivalent of 20 in market b investors could purchase the security in market a and immediately sell it for 20 in market b netting a profit of 10 without any true risk or shifting of the markets as securities from market a are sold on market b prices on both markets should change in accordance with the changes in supply and demand all else equal increased demand for these securities in market a where it is relatively cheaper should lead to an increase in its price there conversely increased supply in market b where the security is being sold for a profit by the arbitrageur should lead to a decrease in its price there over time this would lead to a balancing of the price of the security in the two markets returning it to the state suggested by the law of one price the big mac index is an informal measure of the significance of trade barriers and other geographic frictions in establishing the costs of similar goods based on the market cost of mcdonald s signature burger although a big mac is nearly identical in each geography variations in labor costs agricultural prices and local regulations mean that the sandwich may cost as much as 8 17 or as little as 2 39 1exceptions to the law of one pricein the real world the assumptions built into the law of one price frequently do not hold and persistent differentials in prices for many kinds of goods and assets can be readily observed | |
when dealing in commodities or any physical good the cost to transport them must be included resulting in different prices when commodities from two different locations are examined | if the difference in transportation costs does not account for the difference in commodity prices between regions it can be a sign of a shortage or excess within a particular region this applies to any good that must be physically transported from one geographic location to another rather than just transferred in title from one owner to another it also applies to wages for any employment where the worker must be physically present at the worksite to perform the job because transaction costs exist and can vary across different markets and geographic regions prices for the same good can also vary between markets where transaction costs such as the costs to find an appropriate trading counterparty or costs to negotiate and enforce a contract are higher the price for a good will tend to be higher there than in other markets with lower transaction costs legal barriers to trade such as tariffs capital controls or in the case of wages immigration restrictions can lead to persistent price differentials rather than one price these will have a similar effect to transportation and transaction costs and might even be thought of as a type of transaction cost for example if a country imposes a tariff on the importation of rubber then domestic rubber prices will tend to be higher than the world price because the number of buyers and sellers and the ability of buyers and sellers to enter the market can vary between markets market concentration and ability of buyers and sellers to set prices can vary as well a seller who enjoys a high degree of market power due to natural economies of scale in a given market might act like a monopoly price setter and charge a higher price this can lead to different prices for the same good in different markets even for otherwise easily transportable goods | |
what are the assumptions of the law of one price | the law of one price assumes that there are no transaction costs or trade barriers between different markets and that market actors are free to compete against one another given these conditions the prices of most commodities should equalize between different markets as consumers seek out the most affordable versions of each good | |
why is the law of one price important | the law of one price is the basis of establishing purchasing power parity the principle that if a good should have the same price in different countries when you factor in currency exchange rates if these prices are significantly different that may be a sign that one currency is under or overvalued | |
what does the law of one price mean in finance | in financial markets the law of one price states that two equivalent securities should have the same value even if they were created under different circumstances in other words a synthetic security should have the same market price as a physical security with the same payoffs if this were not the case an arbitrage opportunity would present itself that could be exploited by savvy traders 2the bottom linethe law of one price is an economic principle that equivalent goods should command the same prices in different markets provided that there are no significant transaction costs or trade barriers in practice differences in market structure and demand often cause variations in price across geographies | |
what is the law of supply | the law of supply is a microeconomic law it states that all other factors being equal as the price of a good or service increases the quantity of that good or service that suppliers offer will increase and vice versa in plain terms this law means that as the price of an item goes up suppliers will attempt to maximize their profits by increasing the number of that item that they sell daniel fishel investopediaunderstanding the law of supplythe chart below depicts the law of supply using a supply curve which is upward sloping a b and c are points on the supply curve each point on the curve reflects a direct correlation between quantity supplied q and price p so at point a the quantity supplied will be q1 and the price will be p1 and so on julie bang investopediathe supply curve slopes upward because over time suppliers can choose how much of their goods to produce and later bring to market at any given point in time however the supply that sellers bring to market is fixed and sellers simply face a decision to either sell or withhold their stock from a sale consumer demand sets the price and sellers can only charge what the market will bear if consumer demand rises over time the price will rise and suppliers can choose to devote new resources to production or new suppliers can enter the market which increases the quantity supplied demand ultimately sets the price in a competitive market supplier response to the price they can expect to receive sets the quantity supplied the law of supply is one of the most fundamental concepts in economics it works with the law of demand to explain how market economies allocate resources and determine the prices of goods and services british economist alfred marshall 1842 1924 a specialist in microeconomics contributed significantly to supply theory especially in his pioneering use of the supply curve he emphasized that the price and output of a good are determined by both supply and demand the two curves are like scissor blades that intersect at equilibrium 1examples of the law of supplythe law of supply summarizes the effect that price changes have on producer behavior for example a business will make more video game systems if the price of those systems increases the opposite is true if the price of video game systems decreases the company might supply 1 million systems if the price is 200 each but if the price increases to 300 they might supply 1 5 million systems to further illustrate this concept consider how gas prices work when the price of gasoline rises it encourages profit seeking firms to take actions to expand supply such as the law of supply is so intuitive that you may not even be aware of all the examples around you for example when college students learn that computer engineering jobs pay more than english professor jobs the supply of students with majors in computer engineering increases if consumers start paying more for cupcakes than for doughnuts bakeries will increase their output of cupcakes and reduce their output of doughnuts to increase their profits the law of supply can even impact your own employment when your employer pays time and a half for overtime the number of hours you are willing to supply for work might increase | |
what are the types of law of supply | there are five types of supply market supply short term supply long term supply joint supply and composite supply meanwhile there are two types of supply curves individual supply curves and market supply curves individual supply curves graph the individual supply schedule while market supply curves represent the market supply schedule | |
what factors affect supply | supply is influenced by prices and consumer demand the number of suppliers available the level of competition the state of technology and the presence of government support or restriction will play important roles for certain products like agricultural commodities supply is also impacted by factors such as weather and crop yields | |
what is the law of demand | the law of demand is a fundamental principle of economics that states that at a higher price consumers will demand a lower quantity of a good and vice versa | |
what is supply and demand | the law of supply and demand outlines the interaction between a buyer and a seller of a resource supply and demand law says that sellers will supply less of a product or resource as price decreases while buyers will buy more and vice versa until an equilibrium price and quantity are reached it incorporates both the law of supply and the law of demand 2the bottom linethe law of supply states that a higher price for a good or service will lead producers to supply more of that good or service to the market this is because businesses want to increase their profits when they can get a higher price for something they will produce more of it than they will of other lower priced goods and services on the other hand if prices fall suppliers won t produce as much the law of supply is one part of the law of supply and demand | |
what is the law of supply and demand | the law of supply and demand combines two fundamental economic principles that describe how changes in the price of a resource commodity or product affect its supply and demand supply rises while demand declines as the price increases supply constricts while demand grows as the price drops levels of supply and demand for varying prices can be plotted on a graph as curves the intersection of these curves marks the equilibrium or market clearing price at which demand equals supply and represents the process of price discovery in the marketplace investopedia alex dos diazunderstanding the law of supply and demandit may seem obvious that the price satisfies both the buyer and the seller in any sale transaction matching supply with demand the interactions between supply demand and price in a free marketplace have been observed for thousands of years 1many medieval thinkers distinguished between a just price based on costs and equitable returns and one at which the sale was transacted just like modern day critics of market pricing for select commodities 2our understanding of price as a signaling mechanism matching supply and demand is rooted in the work of enlightenment economists who studied and summarized the relationship supply and demand don t necessarily respond to price movements proportionally the degree to which price changes affect the product s demand or supply is known as its price elasticity price discovery based on supply and demand curves assumes a marketplace in which buyers and sellers are free to transact or not depending on the price products with a high price elasticity of demand will see wider fluctuations in demand based on the price basic necessities will be relatively inelastic in price because people can t easily do without them so demand will change less relative to changes in the price factors such as taxes and government regulation the market power of suppliers the availability of substitute goods and economic cycles can all shift the supply or demand curves or alter their shapes however the commodities affected by these external factors remain subject to the fundamental forces of supply and demand as long as buyers and sellers retain agency the law of demandthe law of demand holds that demand for a product changes inversely to its price when all else is equal the higher the price the lower the level of demand buyers have finite resources so their spending on a given product or commodity is limited as well higher prices reduce the quantity demanded as a result demand rises as the product becomes more affordable changes in demand levels as a function of a product s price relative to buyers income or resources are known as the income effect but some exceptions exist one is giffen goods these are typically low priced staples also known as inferior goods they re those who see a drop in demand when incomes rise because consumers trade up for higher quality products the substitution effect turns the product into a giffen good when the price of an inferior good rises and demand goes up because consumers use more of it in place of costlier alternatives veblen goods are at the opposite end of the income and wealth spectrum they re luxury goods that gain in value and consequently generate higher demand levels as they rise in price because the price of these luxury goods signals and may even increase the owner s status veblen goods are named for economist and sociologist thorstein veblen who developed the concept and coined the term conspicuous consumption to describe it 3the law of supplythe law of supply relates price changes for a product to the quantity supplied the law of supply relationship is direct not inverse the higher the price the higher the quantity supplied lower prices mean reduced supply all else being equal higher prices give suppliers an incentive to supply more of the product or commodity assuming their costs aren t increasing as much lower prices result in a cost squeeze that curbs supply supply slopes are upwardly sloping as a result as with demand supply constraints may limit the price elasticity of supply for a product supply shocks can cause a disproportionate price change for an essential commodity equilibrium pricealso called a market clearing price the equilibrium price is that at which demand matches supply producing a market equilibrium that s acceptable to buyers and sellers supply and demand in terms of the quantity of the goods are balanced at the point where an upward sloping supply curve and a downward sloping demand curve intersect leaving no surplus supply or unmet demand the level of the market clearing price depends on the shape and position of the respective supply and demand curves which are influenced by numerous factors factors affecting supplysupply will tend to decline toward zero at product prices below production costs in industries where suppliers aren t willing to lose money price elasticity will also depend on the number of sellers their aggregate productive capacity how easily it can be lowered or increased and the industry s competitive dynamics taxes and regulations may matter as well factors affecting demandconsumer income preferences and willingness to substitute one product for another are among the most important determinants of demand consumer preferences will depend in part on a product s market penetration because the marginal utility of goods diminishes as the quantity owned increases the first car is more life altering than the fifth addition to the fleet the living room tv is more useful than the fourth one for the garage | |
what is a simple explanation of the law of supply and demand | higher prices cause supply to increase as demand drops lower prices boost demand while limiting supply the market clearing price is one at which supply and demand are balanced | |
why is the law of supply and demand important | the law of supply and demand is essential because it helps investors entrepreneurs and economists understand and predict market conditions a company that s considering a price hike on a product will typically expect demand for it to decline as a result and will attempt to estimate the price elasticity and substitution effect to determine whether to proceed | |
what is an example of the law of supply and demand | gasoline consumption plunged with the onset of the covid 19 pandemic in 2020 and prices quickly followed because the industry ran out of storage space the price decline in turn served as a powerful signal to suppliers to curb gasoline production crude oil prices in 2022 then provided producers with additional incentive to boost output 45the bottom linethe law of supply and demand reflects two central economic principles that describe the relationship between price supply and demand the law of demand posits that demand declines when prices rise for a given resource product or commodity demand increases as prices fall on the supply side the law posits that producers supply more of a resource product or commodity as prices rise supply falls as prices fall the price at which demand matches supply is the equilibrium the point at which the market clears the law of supply and demand is critical in helping all players within a market understand and forecast future conditions | |
what is lawful money | lawful money is any form of currency issued by the united states treasury and not the federal reserve system it includes gold and silver coins treasury notes and treasury bonds lawful money stands in contrast to fiat money in which the government assigns value although it has no intrinsic value of its own and is not backed by reserves fiat money includes legal tender such as paper money checks drafts and banknotes lawful money is also known as specie which means in actual form understanding lawful moneyoddly enough the dollar bills that we carry around in our wallets are not considered lawful money the notation on the bottom of a u s dollar bill reads legal tender for all debts public and private and is issued by the u s federal reserve not the u s treasury legal tender can be exchanged for an equivalent amount of lawful money but macro effects such as inflation can change the value of fiat money lawful money is said to be the most direct form of ownership but for purposes of practicality it has little use in direct transactions between parties history of lawful moneythe federal reserve act of 1913 which established the federal reserve system and authorizes it to issue federal reserve notes states that federal reserve notes shall be obligations of the united states and shall be receivable by all national and member banks and federal reserve banks and for all taxes customs and other public dues they shall be redeemed in lawful money on demand at the treasury department of the united states in the city of washington district of columbia or at any federal reserve bank 1 however the act did not explicitly define what lawful money meant since some currencies that could be used by national banking associations as lawful money reserves were not considered legal tender congress amended the federal reserve act in 1933 to include all u s coins and currency as legal tender for all purposes 2 the 1933 amendment extended the power of legal tender to all types of money creating dissension on whether paper money and reserves of the federal reserve bank are lawful money 2 while some argue that federal reserve notes are lawful money others tend to disagree confusion over lawful moneysince the us constitution states no state shall make any thing but gold and silver coin a tender in payment of debts some believe that this is the definition of lawful money and thus any payment medium other than gold or silver is not considered lawful money in effect the primary meaning of lawful money is legal tender but a broader interpretation is frequently applied in certain contexts because no legal definition of lawful money was ever provided the term has led to a lot of confusion primarily in legal aspects for all intents and purposes lawful money should mean legal tender but is not always the case this has caused a lot of confusion for students of law and banking professionals believe that congress should pass a simple statute stating what lawful money is ensuring it includes all forms of u s currency particularly since the use of gold and silver is not a regular occurrence anymore lawful money is separate from the classification of money which is broken down as m0 m1 m2 and m3 the classifications incorporate all of the money used in the u s economy | |
what is layaway | layaway is a way of buying something in which a consumer makes a down payment on an item which the store then holds for them while they pay the remainder of the price in installments after which they take possession of it a layaway plan ensures that the consumer will get their chosen merchandise when they ve fully paid for it 1understanding layawaylayaway works for consumers who have limited disposable incomes and are unable to make larger lump sum purchases there is sometimes a fee for this because the seller must keep the item in storage until the payments are completed with little risk involved for the seller layaways can be readily offered to those with bad credit if the transaction is not completed the item is simply returned to the shelf the customer s money may either be returned in full forfeited entirely or returned minus a fee 1layaway programs also benefit retailers by allowing them to offer products to lower income customers as a type of savings plan because the customer has already made a commitment to purchase the product on layaway they cannot succumb to the temptation to spend that money elsewhere online layawayonline layaway programs let consumers purchase items via scheduled deductions that are taken from a checking account online layaway simplifies layaway for both merchants and consumers by removing associated storage and bookkeeping costs the layaway items remain housed at the distribution center during the layaway period rather than taking up valuable retail warehouse space 1retailers often restrict layaway purchases to more expensive items such as jewelry and electronic goods smaller items such as toys are typically unavailable for purchase through layaway programs layaways vs credit cardsthere are both similarities and differences between layaways and credit cards layaways and credit cards are each used to purchase an item that an individual cannot currently afford both have late payment fees as well as penalties for default both also allow for payment in installments over a certain time period one of the differences between the two is that with a credit card an individual can take home the item they purchased right away with layaway an individual can only take home an item after they have fully paid for it layaway requires a deposit whereas a credit card does not depending on the layaway you do not pay interest on the unpaid balance with a credit card you do which can quickly increase the cost of a purchase and send individuals into credit card debt if you default on a layaway plan it will not impact your credit score whereas on a credit card it will 2 also you do not need good credit to use a layaway program but you do need good credit to receive a credit card or at least good terms on a credit card credit cards are usually a better option if you can pay off your balance in full the next month and not accrue interest credit cards allow you to build a positive credit history take advantage of rewards plans by which you can earn points or cash back and receive your item right away however if you can t pay your balance in full the next month layaway can be a better option to avoid accruing the high interest debt associated with credit cards the origin of layaway plansthe advent of layaway plans came during the great depression of the 1930s when most individuals and families were suffering greatly financially it stayed popular until the 1980s when the increasing availability of credit cards began to make it superfluous for example in september of 2006 walmart ended layaway service after 44 years according to reportage by npr the company blamed declining demand and escalating costs 13however in september of 2011 wal mart resumed the service due to new financial difficulties brought on by the great recession and subsequently increased consumer credit constraints however it was only brought back for the holiday season 4 it remained in place until 2021 when walmart once again discontinued its layaway program replacing it with a buy now pay later bnpl program called affirm 5in essence the affirm program lends customers the money to buy their item which they don t have to wait to take home they repay the loan with regular payments over a set amount of time anywhere from three to 24 months depending on the size of the loan items available for such financing include electronics video games tools toys musical instruments jewelry home improvement and apparel 5though there are some 0 promotional interest rates available the offer generally comes with interest rates ranging between 10 and 30 creating an affirm account will not affect your credit score but purchasing an item with it could these features differentiate the program from other bnpl offers making it more like using a credit card however unlike credit cards affirm does not charge fees of any sort 5 | |
does anyone still use layaway | as of 2021 there are still some companies that offer layaway programs though the details vary among them here are eight this military retailer offers three layaway options 6your purchase must be for at least 25 and there is a 15 down payment and nonrefundable 3 processing fee if you cancel the purchase a 5 fee is charged excluded merchandise consists of clearance items computers peripherals and major appliances furniture mattresses exercise equipment and seasonal and outdoor living items and electronics costing 299 and up the service is only available in the store 6owned by the same company these two stores offer the same layaway plan it is not available at every store though so you should check out the online list on the burlington website 7you can put your merchandise on layaway for 30 days there is a down payment of 10 or 20 whichever is greater and a nonrefundable 5 service fee payments can only be made in the store by cash check or credit card and you can pay by installment or in full if you cancel there is a 10 fee ineligible merchandise includes food items wall art rugs lamps and furniture 8big lots has two layaway programs one is called price hold it means that the store will maintain the current price of an item when it is out of stock or when you can t pay for it in full the price will be maintained until either the item is restocked or you have fully paid for it there is no set time limit but the company will require you to notify it when you are within two weeks of paying it off to be sure that it is available for pickup 9 the program is only available in stores that sell furniture a list of which can be found by using the store locator on the big lots website 10the progressive leasing program is a 12 months to ownership offer in california it s three months you may take your merchandise home but you are only leasing it until you pay for it in full to qualify you only need to be 18 years old have a valid social security number or individual taxpayer identification number itin have an open and active checking account and own a credit or debit card there are no application or processing fees your payments will be drawn electronically from your credit or debit card 11you can purchase your product early but it will cost more than the retail price to do so except in california eligible items include sofas love seats sectionals dining sets and mattresses as well as seasonal items such as outdoor patio furniture gazebos umbrellas chairs and more 11some hallmark gold crown stores offer a layaway policy it is only in effect from july through december and the layaway term is up to 90 days there is a 20 down payment the policies can be different at different stores so make sure to check with a sales associate for specifics on fees cancellation possible interest charges etc 12both online and in store layaway plans are offered by kmart and sears which are owned by the same parent company transformco the duration of layaway at the remaining kmart and sears stores is either eight weeks or 12 weeks with the latter only available in the store for items costing 300 or more there is a down payment of 10 and payments must be made every two weeks either online or in the store there is a nonrefundable 5 service fee for eight week items and a 10 service fee for 12 week items 13if you miss a payment you have seven days to catch up after which your layaway plan is canceled and you pay a 10 or 20 cancellation fee depending upon the length of your layaway if you cancel the contract you will get a full refund of any payments made to date except for service and cancellation fees only items that are marked layaway eligible can be purchased with the plan and you can find that label online on the product page 14unfortunately according to reporting by the health website best life kmart is closing most of its stores with only six scheduled to be still operating at the end of 2021 the chicago tribune reported that only 35 sears stores remained in business as of sept 16 2021 their previous parent company sears holdings filed for bankruptcy in 2018 and was acquired by transformco which has been closing stores and selling off assets 15marshalls has a program called elayaway that offers loans through a company called vivaloan same day approval is possible after filling out a seven minute application a 10 down payment is required and there is a nonrefundable 5 service fee installment payments begin within 30 days 16even people with poor credit can get one you only need to be 18 years old with a regular income on time loan payments are reported to credit agencies which can improve your credit score over time 17 | |
what is a layaway plan | layaway is a purchasing method by which a consumer places a deposit on an item to lay it away for later pickup when they come back and pay the balance it often charges no interest and is available to almost anyone even those with bad credit paying on layaway generally does not affect your credit score unlike with bnpl plans and credit cards if payments are missed | |
what are the origins of layaway | layaway plans first appeared after the great depression motivated by the financial hardship so many people were experiencing they remained popular until supplanted by credit cards in the 1980s then made something of a comeback after the great recession of 2008 currently their popularity is once again receding with bnpl plans proving more popular | |
is a layaway plan better than using a credit card | it depends credit cards allow you to own your purchase immediately and don t require a down payment to do so using them responsibly can build your credit score which layaway plans usually don t do furthermore credit cards come with rewards programs unlike layaway plans that said layaway plans usually don t charge interest while credit card interest rates can be quite high and mount quickly and in the case of a default with a credit card your credit score will be damaged with a layaway plan it won t be affected and of course you need good credit to get a credit card but not to be eligible for a layaway plan | |
what is a layoff | a layoff is the temporary or permanent termination of a worker s employment for reasons unrelated to the individual s performance on the job employees may be laid off when companies decide to cut costs due to a decline in demand for their products or services seasonal closure a change in the business direction or an economic downturn 1employees who are laid off lose their wages and company benefits but qualify for government sponsored unemployment insurance or compensation for a period of time laid off employees do not lose their investments in company retirement plans such as a 401 k plan the federal law known as cobra for consolidated omnibus reconciliation act gives laid off employees the right to continue their company health plan coverage at their own expense for 18 to 36 months 2understanding layoffslayoffs typically affect groups of workers rather than single individuals they are a cost cutting measure that may be prompted by a company s change in strategy or financial difficulties they often occur as a result of the sale of a company as a new owner consolidates departments layoffs are understandably unpopular with workers whether their employers call them downsizing rightsizing or smart sizing a layoff may also be called a workforce reduction or a reduction in force companies seeking to avoid or minimize layoffs sometimes offer their workers a voluntary buyout with financial inducements to leave voluntarily older employees may be offered early retirement replacing a paycheck with retirement benefits in some cases employers conduct layoffs even when their businesses are thriving either to increase their profits or as part of a shift in operations layoff vs furlough vs firinga layoff is generally intended to be permanent although rehires are not unknown if a company backtracks on a decision a furlough is intended to be temporary and is usually due to a short term production shutdown workers who have been furloughed may keep their job titles and employee benefits with the expectation that they will eventually return to work 1public service employees face a furlough when legislators deadlock on the budget appropriations that are required to pay their salaries during a government shutdown non essential workers may be furloughed while workers in essential services are forced to work with their pay delayed until a funding agreement is reached furloughed workers may be eligible to collect unemployment insurance benefits depending on eligibility requirements which are set by the states 3an employee may be fired or terminated on the grounds of unsatisfactory performance malfeasance or breach of duty an employee who is terminated with cause generally does not qualify for unemployment insurance example of mass layoffsu s employers resorted to mass layoffs amid a drastic downturn in demand during the early stages of the covid 19 pandemic as restrictions and contagion fears halted travel shut restaurants and idled many other service industries u s employers cut more than 20 million jobs in april 2020 alone according to the u s bureau of labor statistics bls 4to preserve jobs the u s government offered the paycheck protection program with loans subsidizing businesses payroll costs that would be forgiven under certain conditions the program was intended to encourage businesses to keep their workers on through the pandemic 5layoff statisticsstatistics on layoffs are a key component of the larger numbers on total employment such as the monthly data on nonfarm payrolls and the unemployment rate the monthly job openings and labor turnover survey jolts from the bureau of labor statistics is a count of separations from employment for all causes including layoffs resignations firings transfers retirements and death from all of these numbers it reaches a number for job openings for september 2023 for example the bureau announced that job openings nationwide totaled 9 6 million virtually the same as the previous month there also was little change in the numbers that make up that total which include all job separations voluntary and involuntary 6special considerationsthe workers who lose their jobs bear the brunt of layoffs but mass job losses also hurt the workers who remain their communities the broader economy and even the employer moreover they may not offer the financial boost that companies are hoping for when they embark on mass layoffs stanford graduate school of business professor jeffrey pfeffer argues that the recent rounds of layoffs among big tech companies were unnecessary and for that matter did the companies no good at all he dismisses the entire phenomenon as copycat behavior among tech companies 7the downsides include high levels of stress for both laid off employees and those left behind and a deterioration of the customer experience not least layoffs can cost the company more than they save in the long run | |
what should you do when you get laid off | the first step after a layoff is to carefully review your contract of employment and any severance package your former employer is offering this may include severance payments continuation of benefits and healthcare insurance employers may attach conditions to severance agreements such as requiring that you not claim unemployment insurance it may be a good idea to negotiate your severance agreement and have an attorney review any paperwork before you sign | |
what happens to your health insurance when you get laid off | in most cases your employer will stop paying for health insurance at the end of the month if you are laid off you can then continue your coverage through the federal cobra program for a term of 18 to 36 months you will get the same insurance you had as an employee at the rate that the company has negotiated for its employee coverage 89cobra coverage is significantly more expensive than employer provided health insurance you may be better off getting coverage through one of the plans offered under the affordable care act during the time you re unemployed you should qualify for a substantial subsidy for the coverage and may pay little or nothing for it | |
how long after being laid off can i file for unemployment | according to the u s department of labor you should file for unemployment insurance benefits as soon as possible if you become unemployed to be eligible for unemployment insurance you must be laid off or fired through no fault of your own and meet certain wage and work requirements such as the length of time you held your previous job some states have additional requirements 10 | |
what happens to my 401 k after a layoff | depending on the size of your 401 k you may be able to leave it with your former employer it may be better to transfer the balance either to a new employer or into an individual retirement account ira it is essential to transfer the balance through a direct transfer between financial institutions rather than allowing the administrator of your former employer s 401 k plan to cut you a check otherwise you could owe income taxes on the entire balance 1112who gets laid off during a merger following a merger or acquisition many companies eliminate redundancies in their combined workforce this will typically affect the c suite as well as any area where the new company has two departments performing similar functions human resource and payroll departments are a frequent target since it s hard to predict which workers will be laid off mergers are inevitably a source of anxiety for all employees the bottom linelayoffs are a painful fact of life in a market economy exposed to intense competition and a constant search for higher profits layoffs can be damaging psychologically as well as financially to the affected workers and those who are left behind as well as their families communities colleagues and other businesses any employee who is vulnerable to a layoff should be aware that there are government programs that can fill the gap between jobs and supply some income and uninterrupted health coverage | |
what is a lead bank | a lead bank is a bank that oversees the arrangement of loan syndication the lead bank receives an additional fee for this service which involves recruiting the syndicate members and negotiating the financing terms in the eurobond market the lead bank acts in an agent capacity for an underwriting syndicate a lead bank is also known as a lead underwriter understanding lead banksa lead bank usually refers to an investment bank that manages the process of underwriting a security in conjunction with other banks known as syndicate banks in this sense the lead bank can also be referred to as a lead manager or managing underwriter a more general meaning of this term is simply the primary bank of an organization that uses several banks for several different purposes the lead underwriting bank will usually work with other investment banks to establish an underwriter syndicate and thereby create the initial sales force for a company s securities these bonds or shares will then be sold to institutional and retail clients the lead bank will usually be the one to assess the company financials and current market conditions to arrive at the initial value and quantity of shares to be sold these securities often carry a hefty sales commission as much as 6 to 8 percent for the syndicate with the majority of shares being held by the lead bank the role of the lead bank in loan syndicationin loan syndication multiple banks will work together to provide a borrower with the capital needed loan syndications generally form for corporate borrowing purposes including for mergers acquisitions buyouts and other capital projects situations that require loan syndication will usually involve a borrower who needs a large sum of capital that may be too much for a single lender to provide and or outside the scope of this lender s risk exposure levels a lead bank in this case is often responsible for all aspects of the deal including the initial transaction fees compliance reports repayments throughout the duration of the loan loan monitoring and overall reporting for all lenders within the deal lead banks of loan syndications may charge high fees because of the vast reporting and coordination efforts needed to complete and maintain loan processing these fees can be as high as 10 of the loan principal at times the lead bank may rely on a third party and or additional specialists throughout various points of the loan syndication or repayment process to assist with reporting and monitoring the role of the lead bank in securities underwritingin an initial public offering ipo or other forms of issuing securities a lead bank may organize a group of underwriters also called the underwriting syndicate for the deal as with a loan syndicate the purpose of an underwriting syndicate is often to spread out risk and or merge funds in a large deal lead banks will assess an issuing company s financials and current market conditions to arrive at an initial value and quantity of shares to be sold newly issued shares may carry a hefty sales commission for an underwriting syndicate at times nearly 6 8 however the largest portion of shares will go to the lead bank | |
what is lead time | lead time is the amount of time that passes from the start of a process until its conclusion companies review lead time in manufacturing supply chain management and project management during pre processing processing and post processing stages by comparing results against established benchmarks they can determine where inefficiencies exist reducing lead time can streamline operations and improve productivity increasing output and revenue by contrast longer lead times negatively affect sales and manufacturing processes investopedia jessica olahunderstanding lead timeproduction processes and inventory management can affect lead time in regards to production building all elements of a finished product onsite may take longer than completing some items offsite transportation issues can delay delivery of necessary parts halting or slowing production and reducing output and return on investment roi using locally sourced parts and labor can shorten lead time and speed production and offsite sub assemblies can save additional time reducing production time allows companies to increase production during periods of high demand quicker production can increase sales customer satisfaction and the company s bottom line efficient inventory management is necessary to maintain production schedules and meet consumer demand stockouts occur when inventory or stock is unavailable preventing the fulfillment of a customer s order or product assembly production stops if an organization underestimates the amount of stock needed or fails to place a replenishment order and suppliers cannot replenish materials immediately this can be costly for a company s bottom line one solution is to use a vendor managed inventory vmi program which provides automated stock replenishment these programs often come from an off site supplier using just in time jit inventory management for ordering and delivering components based on usage a great example of lead time is the time needed to process a passport if you re planning on traveling internationally prepare to get your passport renewed months in advance of your trip the government estimates the lead time for routine passport processing as six to eight weeks for applications received on or after december 18 2023 1 | |
how to calculate lead time | lead time can be broken in several different components the pre processing the processing and the post processing these may be defined or stated differently but the general formula to calculate lead time is lead time pre processing time processing time post processing timefor a manufacturing company the pre processing time is the procurement stage where raw materials are sourced and delivered to its manufacturing headquarters or processing plant the processing time is the manufacturing stage the post processing time is the stage of processing the order and delivering the final good to the customer lead time for manufacturing company procurement time for raw materials manufacturing time shipping timefor a retail company there is no manufacturing time as the retail firm does not manufacture its own good in addition the procurement time is different as instead of procuring raw materials it sources final products to then sell directly to customers lead time for retail company procurement time for final products shipping timelead time and supply chainthe lead time varies among supply chain sources causing difficulty in predicting when to expect the delivery of items and coordinating production frequently the result is excess inventory which places a strain on a company s budget lead time scheduling allows for the receipt of necessary components to arrive together and reduces shipping and receiving costs some lead time delays cannot be anticipated shipping obstructions due to raw material shortages natural disasters human error and other uncontrollable issues will affect lead time for critical parts a company may employ a backup supplier to maintain production working with a supplier who keeps inventory on hand while continuously monitoring a company s usage helps alleviate the issues resulting from unanticipated events stockpiling necessary parts may be cost prohibitive but reducing the number of surplus parts also helps place a ceiling on production costs one solution is for companies to use kitting services to organize their inventory with kitting services inventory items are grouped based on their specific use in the project workers save time choosing from smaller lots of parts keeping production more organized and efficient using offsite assembly in overseas markets instead of shipping completed goods can help companies save money on tariffs the importance of short lead timeshort lead time is important as it impacts the financial emotional and operational aspects of a company and its relationship with its customer several specific examples of the importance of short lead time include | |
how to reduce lead time | though an entire manufacturing and distribution process may be complex with many stages companies can take steps to reduce lead time and shorten the number of days for each process consider the following ways to reduce lead time types of lead timethere are three primary types of lead time each must be considered in conjunction with each other to set overall expectations of a manufacturing process therefore these three primary types often flow into a fourth type of aggregated lead time the customer lead time is the amount of time between when a customer places an order and when the customer receives the product this includes the time between when a customer places an online order and the company receives the order confirmation then it includes the entire manufacturing process shipping process and delivery process the material lead time is the amount of time between when a company becomes aware of a need for raw materials and when the materials are physically obtained companies are often alerted by inventory management systems when orders are processed this lead time may be influenced by information systems that notify management when current inventory levels are low it may also be impacted by ordering shipping delivery and fulfillment by suppliers once materials have been received the production lead time kicks off this is the amount of time between when a company has all necessary resources on hand to manufacture a product and when it completes the manufacturing process unlike other lead times this entire lead time should be internally manageable and depends on internal factors such as waste labor equipment efficiency ppe availability and machinery downtime lead times above may be aggregated to create a fourth lead time and companies may track different cumulative lead times for example a company may be interested in the internal lead time i e when raw materials are sourced to when the final product is manufactured though it may seem bureaucratic breaking lead time into the categories above helps a company identify the strong and weak points along the sale process factors that affect lead timeanalyzing the lead time formula for a manufacturing company the factors that affect lead time can be broken into three categories the procurement factors the manufacturing factors and the shipping factors procurement lead time factors all relate to the sourcing of raw materials for production well established companies with strong relationships with suppliers may be less impacted by these factors still when relying to external companies there is always the risk that lead time falters due to an external failure to deliver procurement lead time factors that increase lead time include manufacturing lead time factors are relatively all controllable for a company this internal only stage of the sale process means a company may change processes personnel or equipment to improve or worsen lead time as opposed to the other two lead time factors a company should have almost full discretion over the manufacturing lead time factors these factors that result in longer lead times include | |
when the finished product is sent to a customer many factors are out of the hands of the company though the company can control how fast an item gets off the production line and onto a delivery vessel a company is often at the whim of whatever delivery method they choose these factors include | example of lead timeimagine a large festival that takes place during the first week of august every year that attracts 100 000 people on average and typically sells 15 000 festival t shirts the vendor that supplies the t shirts needs one business day to complete the shirt design one business day to have it proofed and make any necessary fixes one business day to print the shirts and two business days to ship the items the lead time in this example would be five business days in other words the festival organizers need to place their order with the t shirt supplier at least five business days before the opening of the festival in order to get the shirts on time of course that lead time can be shortened in some extreme situations if the buyer is willing to pay a premium if t shirt sales on the first day of the festival exceed expectations festival organizers may decide to order additional shirts on the second day with the hope that they can be delivered by the third day since the shirts have already been designed and approved that means five days of lead time can be reduced to three to meet that shortened lead time the vendor would need to print the additional shirts as quickly as possible in order to ship them overnight for delivery the following morning additional factors can affect lead time in this example if festival organizers want a certain percentage of the t shirts to be fuchsia and the vendor does not regularly keep fuchsia t shirts in stock that can increase the lead time because the vendor will need to order shirts in that color | |
what are the types of lead time | the main types of lead time are customer lead time material lead time factory or production lead time and cumulative lead time the first three types of lead time are summed to arrive at the fourth type of lead time | |
what are the main components of lead time | the main factors that make up lead time are preprocessing processing waiting storage transportation and inspection the factors are often compiled into the three main stages of an order the before pre processing the during processing and the after shipping | |
what is lead time in shipping | lead time in shipping is the period of time between when an order is first received and when it reaches the customer it includes the processing of the order and then the time spent delivering a package the bottom linelead time describes the amount of time it takes to complete a specific process in business lead time is often used to describe the amount of time it takes to process an order manufacture a product delivery a good or a combination of these processes companies with shorter lead time may have less finished inventory on hand more efficient processes that may cost less and generally happier customers | |
what is leadership | business leadership is the capacity of a company s management to set and achieve challenging goals they must take fast and decisive action when necessary outperform the competition and inspire others to perform at the highest level possible it can be difficult to place a value on leadership or other qualitative aspects of a company unlike quantitative metrics that are commonly tracked and much easier to compare between companies leadership can also speak to a more holistic approach such as the tone a company s management sets or the culture of the company that management establishes individuals with strong leadership skills in the business world often rise to executive positions such as ceo chief executive officer coo chief operating officer cfo chief financial officer president and chair understanding leadershipleadership provides direction for a company and its workers employees must know the direction in which the company is headed and who to follow to reach the destination leadership involves showing workers how to effectively perform their responsibilities and regularly supervising the completion of their tasks leadership is also about setting a positive example for staff to follow being excited about the work being motivated to learn new things and helping out as needed in both individual and team activities leadership involves setting and achieving goals taking action and beating the competition but it also relates to the tone of the company s management and what kind of culture is built for the employees the components of effective leadershipeffective leadership requires a strong character leaders must exhibit honesty integrity trustworthiness and ethics they act in line with how they speak and earn the right to be responsible for others success in the company strong leadership involves clear communication skills leaders speak with and listen to staff members respond to questions and concerns and are empathetic leaders use effective communication skills to move the company forward and achieve new levels of success true leadership sees where the company is headed and plans the steps necessary to get there visualizing what s possible following trends in the industry and taking risks to grow the business are all required of leaders productive leadership shows optimism and provides positive energy for staff good leaders are supportive and truly concerned about the well being of others leaders find answers to challenges and they reassure and inspire workers when things go awry leaders find ways for staff to work together and achieve maximum results efficiently and effectively influential business leaders include jeff bezos warren buffett bill gates and elon musk they shaped their industries and the broader economy investopedia looks at how they developed winning strategies inspired their employees and achieved success 1an example of leadershipjack welch exhibited leadership as chief executive officer ceo of general electric co from 1981 to 2001 he played an integral part in hundreds of acquisitions in emerging markets and increased ge s market value from 12 billion to 410 billion at the time of his retirement 2welch insisted everyone at ge embrace change because the world is constantly changing managers and employees had to continuously reinvent themselves and their work to continue evolving company operations and produce greater output welch hired managers who shared his vision of ge had endless amounts of energy and were able to encourage employees to stay engaged in their work he sought managers who created developed and refined ideas for the future and found ways to make them a reality he also insisted that managers work side by side with employees as a way of understanding what they were doing and why managers and employees were more empowered as a result of welch s leadership style products gained higher quality and customer satisfaction and profits increased dramatically | |
what are some qualities of an effective leader | a good leader should have several qualities they include an ability to motivate individuals a willingness to listen being trustworthy having competence decisiveness good communication skills and selflessly understanding the goals of the team or organization | |
what are some negative traits in a leader | not all leaders are effective and even good leaders can have their faults some negative qualities commonly found in leaders include selfishness quickness to anger impatience rudeness inconsistency micro managing and incompetence |
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