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Basic Question 1 of 3
The liquidation value of a company is
B. always more than its going concern value.
C. normally less than its going concern value.
A. always less than its going concern value.
B. always more than its going concern value.
C. normally less than its going concern value.
User Contributed Comments 5
| User | Comment |
|---|---|
| thekapila | Here is why: If profitable: Liquidation < going concern as firm is engaging in profitability by putting resources. If dying: Liquidation > going concern as no point in engaging capital in negative return project. |
| Roy1 | Nice One! |
| coquin22 | understandable |
| ashish100 | "some firms are better dead than alive" |
| jejemike | Interesting.. so a firm can be worth more dead than alive |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
define valuation and intrinsic value and explain sources of perceived mispricing;
explain the going concern assumption and contrast a going concern value to a liquidation value;
describe definitions of value and justify which definition of value is most relevant to public company valuation;
CFA® 2024 Level II Curriculum, Volume 3, Module 22.