Celadon Trucking filed for bankruptcy in December 2019 due to an inability to cover its debt payments. As part of its agreement to borrow money from lenders, the company has debt restrictions that require it to maintain minimum values of certain financial statement items. Executives of the company have been charged with fraud because they attempted to manipulate company financial statements so that these ratio requirements were met. Specifically, the company failed to write down inventory values to net realizable value in order to boost working capital ratios (current assets minus current liabilities).

INSTRUCTIONS:
Discuss the purpose of the conservative lower-of-cost-or-market rule.