 is an equity valuation approach that considers the salvage value

as the value of the asset. Liquidation value is an asset-based method

based upon the value that the business would immediately receive upon
selling the asset on the open market. It is an estimation of the final value
that will be received by the holder of financial instruments when an
asset is sold, typically under a rapid sale process. A business is
typically liquidated as part of a bankruptcy process and tangible assets
are sold quickly. It determined a company's assets such as real
estate, fixtures, equipment, and inventory. Intangible assets are
excluded from a company's liquidation value. It is used in financial
instrument valuation to simulate the worst-case scenario when a
company or business goes bankrupt. It is also used when a healthy
company considers undergoing a merger, putting itself up for sale, or
applying for credit from its investors or debtor.

 The liquidation value method, like other asset-based methods, fails to

capture the value of the business as a going concern. Further, it is
incapable of attributing relevant value to intangible assets that lack
an immediate comparable value in an immediate market. Intangible
assets, like goodwill, intellectual property, and brands, are not
considered as part of estimation of liquidation value.