Glossary · Reading the business
In short
An accounting principle requiring inventory to be valued at the lower of its original cost or its current market value. This prevents overstating asset values if market prices drop.
When assessing a business's Balance Sheet, pay attention to how inventory is valued. If market conditions have changed, the stated inventory value might be higher than what you could actually sell it for. This impacts the true value of the assets you're acquiring and can affect collateral analysis.
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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