Liquidation value

Liquidation value estimates what a company's assets would fetch if sold off piece by piece and the business wound down today. It is typically the most conservative of the common asset based estimates, since a forced, piecemeal sale rarely captures what those assets are worth operating together as a functioning business.

A stock trading at or below its liquidation value can look like an obvious bargain, since the market is pricing the whole business at less than its pieces could raise if sold separately. That reading skips a needed step, checking why the market is pricing it that way in the first place, since a persistently low price relative to liquidation value often reflects a business that is struggling to operate, not one the market has simply overlooked.