Liquidation Value

What is 'Liquidation Value'

Liquidation value is the total worth of a company's physical assets when it goes out of business or if it were to go out of business. Liquidation value is determined by assets such as the real estate, fixtures, equipment and inventory a company owns. Intangible assets are not included in a company's liquidation value. Intangible assets include a business's intellectual property, goodwill and brand recognition.

BREAKING DOWN 'Liquidation Value'

If a company were to be sold rather than liquidated, both liquidation value and intangible assets would be considered to determine the company's going-concern value. Value investors will look at the difference between a company's market capitalization and its going-concern value to determine whether the company's stock is currently a good buy.
Liquidation value can also refer to the cash value of a single asset.

RELATED TERMS
  1. Going-Concern Value

    The value of a company as an ongoing entity. This value differs ...
  2. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  3. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  4. Calculated Intangible Value - CIV

    A method of valuing a company's intangible assets. This calculation ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  6. Modified Book Value

    An asset-based method of determining how much a business is worth ...
Related Articles
  1. Investing

    How to Calculate Your Tangible Net Worth

    Your net worth can be calculated with a simple equation.
  2. Markets

    Explaining Tangible Net Worth

    Tangible net worth is determined by taking total assets, then subtracting liabilities and intangible assets.
  3. Markets

    What is Liquidity Risk?

    Liquidity risk is the risk of being unable to sell an asset fast enough to avoid loss.
  4. Investing

    Company Clone Cost Reveals True Value

    Find out how calculating a reproduction cost for a company can beat out the dividend discount model.
  5. Investing

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  6. Managing Wealth

    Comparing Tangible and Intangible Assets

    Tangible assets are physical assets such as land, vehicles or equipment.
  7. Managing Wealth

    What's an Asset?

    An asset is a resource with economic value.
  8. Managing Wealth

    Explaining Financial Assets

    A financial asset is intangible property that represents a claim on ownership of an entity or contractual rights to future payments.
  9. Investing

    Goodwill and Intangible Assets: One And The Same?

    "Goodwill" is a broad category for non-physical assets that are impossible to separate from the business itself, whereas "intangible assets" are individually identifiable and can be sold separately ...
  10. Markets

    Understanding Liquidity Risk

    Learn about the two types of liquidity risk: funding liquidity risk and market liquidity risk.
RELATED FAQS
  1. What affects an asset's liquidity?

    Learn about what affects an asset's liquidity, including examples of liquid and fixed assets, and how a company's liquidity ... Read Answer >>
  2. What is the difference between a spot rate and a forward rate?

    Understand the concept of intangible assets and learn how they are handled in the purchase agreement when a company is bought ... Read Answer >>
  3. How does one amortize intangible assets?

    Understand what distinguishes intangible assets and how companies are required to amortize their value over time to recover ... Read Answer >>
  4. What items are considered liquid assets?

    Learn what a liquid asset is, some examples of liquid assets, what a non-liquid asset is and what determines whether as asset ... Read Answer >>
  5. What is the difference between a bank's liquidity and its liquid assets?

    Understand the relationship between a bank's liquid assets and its liquidity and how the financial crisis demonstrated the ... Read Answer >>
  6. What kinds of events or circumstances will increase or decrease the proportion of ...

    Learn the variety of events and circumstances which can significantly increase or decrease the proportion of intangible assets ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center