lead lag study
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. • The term comes from the phrases “lead time” and “lag time.” 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 company can calculate the amount of necessary reserves. [Cases: Public Utilities 124. C.J.S. Public Utilities §§ 23–26, 30–33, 48–49.]
