A firm's liquidation value is the amount:
A) necessary to repurchase all shares of common stock.
B) realized from selling all assets and paying off its creditors.
C) a purchaser would pay for the firm in bankruptcy.
D) equal to the book value of equity.

Question

Quizplus · Accepted Answer

A firm's liquidation value is the amount that can be realized from selling all the assets and using the proceeds to pay off its creditors. This value is typically lower than the firm's going-concern value as there is a cost associated with selling the assets in a distressed situation.

A Firm's Liquidation Value Is the Amount