Legal Dictionary of Pakistan

lead-lag study

A survey used to determine the amount of working capital that a utility company must reserve and include in its rate base, by comparing the time the company has to pay its bills and the time taken by its customers to pay for service. 0 Lead time is the average number of days between the company's receipt and payment of invoices it receives. Lag time is the average number of days between the company's billing of its customers and its receipt of payment. By analyzing the difference in timing between inward cash flow and outward cash flow, the amount of necessary reserves can be calculated.