What Is Liquidation Value?

The liquidation value is the actual value of each share represented by the company when the company is liquidated. The value of each share that shareholders can actually recover when the company is liquidated. If the company can clear the actual sales amount of its assets at the time of liquidation with the book value on the financial statements and deduct a certain amount of liquidation costs, the liquidation value of each common share will be close to its book value. The liquidation value is closely related to the book value of the company at the time of liquidation, but the two are not the same. In most cases, the liquidation value of stocks is less than the book value. The reason is that in addition to the need to deduct liquidation costs, the main reason is that companies usually need to sell their assets at a relatively low price when they are liquidated. The connection between the liquidation value of the stock and the par value is weak. Generally speaking, the magnitude of the deviation from the par value is greater than that of the book value. When the book value of a stock is still higher than its face value when the company faces liquidation, the liquidation value may be slightly lower than the book value but higher than the book value. When the book value is lower than the book value, the liquidation value is even lower. The liquidation value is the value that the investor can understand the actual charge, not only on the book or in calculation, but it is not the transaction price. After the company's liquidation, its stock no longer exists and it has withdrawn from the market. At this time, assets are being traded instead of stocks. ^[1]

Liquidation value

Right!

The liquidation value is the actual value of each share represented by the company when the company is liquidated. The value of each share that shareholders can actually recover when the company is liquidated. If the company can clear the actual sales amount of its assets at the time of liquidation with the book value on the financial statements and deduct a certain amount of liquidation costs, the liquidation value of each common share will be close to its book value. The liquidation value is closely related to the book value of the company at the time of liquidation, but the two are not the same. In most cases, the liquidation value of stocks is less than the book value. The reason is that in addition to the need to deduct liquidation costs, the main reason is that companies usually need to sell their assets at a relatively low price when they are liquidated. The connection between the liquidation value of the stock and the par value is weak. Generally speaking, the magnitude of the deviation from the par value is greater than that of the book value. When the book value of a stock is still higher than its face value when the company faces liquidation, the liquidation value may be slightly lower than the book value but higher than the book value. When the book value is lower than the book value, the liquidation value is even lower. The liquidation value is the value that the investor can understand the actual charge, not only on the book or in calculation, but it is not the transaction price. After the company's liquidation, its stock no longer exists and it has withdrawn from the market. At this time, assets are being traded instead of stocks. ^[1]

According to the literal understanding, the meaning of liquidation is: sell all the company's assets and get the cash available to pay off the liabilities.

The liquidation value of an asset or a company is equal to the estimated price at which it can be sold quickly. If it goes bankrupt. In a booming industry with high profit returns, the company's liquidation value is usually lower than its

According to the different time processes of liquidation, the liquidation value is divided into two types:

1. Normal liquidation value

Orderly Liquidation Value. This assumes that the company will

The liquidation value refers to the estimated amount of asset value judged on the basis that the appraisal object is under forced sale, rapid realization or other abnormal market conditions.

In addition, in November 2007, the Guiding Opinions on the Types of Asset Evaluation Values issued by the China Assets Appraisal Institute defined "liquidation value" as one of the asset evaluation value types, which is a value other than market value types. It is defined as "liquidation value refers to the estimated value of the valuation subject under abnormal market conditions such as forced sale and rapid realisation." It also states that "when the valuation subject is facing forced sale, rapid realisation or the valuation subject has potential forced sale In situations such as rapid liquidation, registered asset appraisers should generally choose liquidation value as the value type of the evaluation conclusion. "