as valuation on the basis of cost or market, whichever is the lower.
Since speedy realization of the current assets by conversion into cash
for its equivalent is the aim and expectation of every business—for on
such conversion depends the ability to meet the current liabilities
and so have working capital available for another cycle of purchase
and sale (another turnover)—it would seem that the realization price
as given by the market should govern. In the interest of conservatism
and as producing certain other desirable results which will be brought
out as each asset is examined in detail, cost price, if lower than
market, is deemed the desirable basis for the valuation of this group.
By way of explanation, it should be said that working capital as used
here is the difference between current assets and current liabilities
and so represents the portion free to be put to the further pursuit of
business.