Lead-Lag Study Law and Legal Definition

Lead-lag study refers to a survey determining the amount of working capital that a company must reserve. The lead-lag study also compares the time the company has to pay its bills. Lead time is the 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.

In Office of Consumers' Counsel v. Public Utilities Com., 25 Ohio St. 3d 213 (Ohio 1986), it was held that lead-lag study is very expensive and time consuming, but it is the most accurate tool for determining cash working capital.