The amount received by a firm's stockholders if the firm were to liquidate its assets and pay off all of its outstanding debt is the firm's:
A) net worth.
B) retained earnings.
C) cash equivalents.
D) accruals.
E) market value.

Question

Quizplus · Accepted Answer

The amount received by the firm's stockholders after the payment of all outstanding debts is the net worth or the book value of the firm. This represents the assets' residual worth and is equivalent to the shareholders' equity. Therefore, option A is the correct answer. Retained earnings, cash equivalents, accruals, and market value are not relevant to the calculation of the net worth of a firm.

The Amount Received by a Firm's Stockholders If the Firm