I often wondered from a practical point of view what value can be placed on a companys reserves. I have a feeling some people think of cash being set aside to meet the reserves but am i correct in thinking that if a company is experiencing problems it will use its cash first to pay creditors and then collect as much debtors as possible and reduce stocks so in the end the reserve figure in the balance sheet could be represented by unsold stock and uncollectable debtors..am i missing something.