Liquidation

Definition: The process of converting assets into cash and settling obligations, often when winding up a business.

Example

A closing business sells equipment, collects receivables, pays creditors, and distributes any remaining amount according to legal priorities.

Keep the distinction clear

Liquidation value can differ from going-concern value. Liquidation is a process; liquidity describes how readily an asset can be converted to cash.

Related terms

Liquidity · Going-Concern Value · Liabilities

Keep studying

Corporation Sole, Sole Proprietorship, and Single-Owner Businesses

References: FREC Course II syllabus: investment concepts

Pronunciation (US): lik-wih-DAY-shun (capitals show stress)

Pronunciation reference: Merriam-Webster