Big Bath Law and Legal Definition

Big bath is a slang term. It is a write-off of significant costs that are made to shed an unprofitable business line. A big bath may also be made to avoid future write-offs. The write-off either removes or reduces the asset from the financial books. This results in lower net income for that year. The purpose of a big bath is to ‘take one big bath’ in a single year so that coming years will show increased net income.