Definition of Liquidation value:
Liquidation value is the net value of a company's physical assets if it were to go out of business and the assets sold. The liquidation value is the value of company real estate, fixtures, equipment, and inventory. Intangible assets are excluded from a company's liquidation value.
Price an asset will fetch at an auction (forced sale). Banks and other lenders value the asset offered as a collateral at its forced sale price and not on the price the asset will command when sold in the normal course of trading. Also called fire sale value.
There are generally four levels of valuation for business assets: market value, book value, liquidation value, and salvage value. Each level of value provides a way for accountants and analysts to classify the aggregate value of assets. Liquidation value is especially important in the case of bankruptcies and workouts.
How to use Liquidation value in a sentence?
- Liquidation value is usually lower than book value, but greater than salvage value.
- Assets are sold at a loss during liquidation because the seller must gather as much cash as possible within a short period.
- Liquidation value is the total worth of a company's physical assets if it were to go out of business and its assets sold.
- Liquidation value is determined a company's assets such as real estate, fixtures, equipment, and inventory. Intangible assets are excluded from a company's liquidation value.
Meaning of Liquidation value & Liquidation value Definition