What does liquidation analysis aim to value?

Liquidation analysis focuses on valuing a company's assets under distressed conditions, typically when a business is facing financial difficulties or bankruptcy. The primary objective is to determine the expected proceeds from selling off assets in a worst-case scenario where the company ceases operations. This analysis involves assessing the fair market value of individual assets, factoring in their liquidity and potential depreciation due to urgency of sale.

This valuation is critical for stakeholders, including creditors and investors, as it provides insights into how much they might recover in the event of liquidation. Unlike the other options, which deal with aspects such as revenue generation from ongoing operations or market performance, liquidation analysis specifically addresses the scenario where the business is not functioning normally, highlighting the immediate real value of its tangible and intangible assets when sold under pressure.