Definition 1
In asset-based lending, the difference between the value of the collateral and the amount lent. Also, funds set aside for emergencies or other future needs. In an auction, the minimum amount a seller is willing to sell at, known to the auction house but not the bidders. From the point of view of financial statements, reserves are provided as an estimate of liabilities that have a good probability of arising, such as bad debt reserve attempts to estimate what percentage of the firm's creditors will not pay (based on previous records and practical experience). Reserves are always a subjective estimate (since they reflect contingent liabilities).

Definition 2
Funds set aside for emergencies or other future needs.

Definition 3
In an auction, the minimum amount a seller is willing to sell at, known to the auction house but not the bidders.

Copyright©2009 by InvestorWords.com. ALL RIGHTS RESERVED.

Reproduction of all or part of this glossary and/or this page, in any format, without written consent is prohibited. If you have questions about this dictionary please feel free to contact us feedback\@\investorguide.com