Most investors are in the business of making money -- they want to know everything about a company, from potential earnings to expected liquidation value. Liquidation value is the value of a company when all assets are sold off. It is commonly used for the purpose of bankruptcies or by lenders who are considering a borrower's application. Bondholders are also considered debtors to the company in case of bankruptcy, so they are also interested in knowing the expected liquidation value.
Instructions
1. Obtain a copy of the most recent annual report. You can request a report by contacting the company's Investor Relations department, or you may be able to download one directly from the company's website.
2. Locate the line item Assets and Liabilities. Assets are all the assets owned in the company and liabilities show the debt (liabilities) the company had to take on in order to purchase these assets. Assume assets are $100,000 and liabilities are $40,000.
3. Calculate the expected liquidation value. Subtract the firm's liabilities from assets. In this example the calculation is $100,000 minus $40,000 or $60,000.
Tags: expected liquidation, expected liquidation value, liquidation value