Which of the following is the best deﬁnition of liquidation?
A) The tax saving attained by a ﬁrm from interest expense.
B) Termination of the ﬁrm as a going concern.
C) The value of the ﬁrm is independent of its capital structure.
D) A ﬁrm's cost of equity capital is a positive linear function of its capital structure.
E) Financial restructuring of a failing ﬁrm to attempt to continue operations as a going concern.

Question

Quizplus · Accepted Answer

Liquidation refers to the termination of a firm as a going concern. It involves selling off a company's assets and using the proceeds to pay off creditors and distribute any remaining value to shareholders.

Which of the Following Is the Best Deﬁnition of Liquidation