CFA Practice Question

There are 57 practice questions for this study session.

CFA Practice Question

The liquidation value of a company is

A. always less than its going concern value.
B. always more than its going concern value.
C. normally less than its going concern value.
Correct Answer: C

The going concern value is normally higher than the liquidation value of a firm. However, this is not always true as some firms are better dead than alive.

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 need to log in first to add your comment.