Question

What is a liquidation policy

Answer 1

In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. The company's operations are brought to an end, and its assets are divvied up among creditors and shareholders, according to the priority of their claims.

Answer 2

Answer:

Liquidation of a business involves selling all of the firm's fixed assets (such as machinery, properties and inventory), thus liquidating its assets. Upon repayment of the company's debt, any profits are paid to the company's owner. Upon liquidation, the company ceases to exist.

Liquidation of a business can be done as voluntary liquidation initiated by the business owners or as forced liquidation which can be initiated by public authorities if the company does not comply with the legislation, such as timely filing of the annual report.