A firm's liquidation value is the amount:
A) necessary to repurchase all outstanding shares of common stock.
B) realized from selling all assets and paying off all creditors.
C) a purchaser would pay to acquire all of the firm's assets.
D) shown on the balance sheet as total owners' equity.

Question

Quizplus · Accepted Answer

Liquidation value is the value that a firm's assets would have if they were sold off in a piecemeal manner, either through a bankruptcy process or by selling off assets while the firm is still in business. The proceeds from the sale of assets would be used to pay off creditors first, with any remaining funds going to the firm's shareholders. Therefore, option B is the correct answer. The other options (A, C, and D) do not accurately reflect the concept of liquidation value.

A Firm's Liquidation Value Is the Amount