Lower of Cost or Net Realizable Value (LCNRV) is a financial accounting principle that requires businesses to record the value of an asset at either its cost or its current market value–whichever is lower. In other words, it ensures that companies do not overstate their assets by inflating their values on financial statements. This concept helps to maintain transparency when reporting business performance to creditors and investors. LCNRV can also play a role in determining whether a company will issue dividends or make certain investments. Put simply, understanding and applying LCNRV is critical for successful business management.