Glossary · Reading the business
In short
An accounting principle for valuing inventory, stating it should be recorded at the lower of its original cost or its current market value. This prevents overstating asset values.
When reviewing inventory during due diligence, this principle helps ensure the balance sheet isn't inflated with obsolete or devalued stock. Your lender will want an accurate inventory valuation, as it impacts the overall asset value and potentially collateral for the loan.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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