What is the definition of Liquidation?

Liquidation is the act of selling off an asset for cash. It is usually a last-resort approach when a firm desperately needs money to pay off its debt or liabilities and has no other means of doing so.

Some assets are more preferably for liquidation than others. Assets that are invested for the long term usually have some form of the penalty associated with early withdrawal and therefore the amount recovered would be less than the firm put in, requiring even more liquidation.

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