In order to make distributions, the corporation's assets must be greater than or equal to its liabilities and liquidation preferences on senior equity.

Question

Quizplus · Accepted Answer

This is true because if the corporation's assets are less than its liabilities and liquidation preferences on senior equity, there would not be enough assets to distribute to shareholders. Therefore, the corporation must have sufficient assets to cover its liabilities and liquidation preferences in order to make distributions.

In Order to Make Distributions, the Corporation's Assets Must Be