net realizable value
Financial Dictionary — Asset Valuation
Definition
Net realizable value The amount of cash expected to be collected on outstanding accounts receivable; Accounts receivable minus the allowance for uncollectible amounts and also represents the amount you would likely receive if an item were sold in a typical transaction, less any costs incurred in selling the item.
Detailed Explanation
Net Realizable Value is the estimated selling price of an asset in the ordinary course of business minus the costs of completion and selling.
Common Uses
- Used to explain the concept in accounting and business contexts.
- Used when training staff or documenting procedures and policies.
- Used when training staff or documenting procedures and policies.
Practical Example
- Example: Teams reference **net realizable value** when defining terms in manuals, policies, or training materials.
Why This Term Matters
- Why it matters: Improves clarity and consistency across documentation and decision-making.