Liquidation

Liquidation

Liquidation is the conversion of assets into cash by an investor getting rid of a position in a particular type of security. ^[1]

The current page says:

• The process of selling assets for cash.

What happens with a short position, you can liquidate a short position without selling anything in the futures markets. The correct thing is liquidation is the process of CONVERTING assets for cash. Even liability will reverse the cash flow and become an asset when it is liquidated.

• This situation generally arises when a company can no longer carry out its business as intended...

This situation generally arises for an Investor whenever they want. When investors convert assets into cash for there own personal accounts,do not need any reason at all. So how can the situation generally arises when a company...? Generally you do not need a company. An investor can liquidate on there own.

• The cash generated out of liquidation is usually spent on...

The cash generated out of liquidation by investors is usually spent on anything that they want. When investors convert (assets) into cash for there own personal accounts, they may have no reason too convert, and can spend the proceeds on whatever they want

Liquidation is the conversion of assets into cash, Liquidity refers to how quickly you can convert your assets into cash. ^[2]

References

1. ↑ Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott Accounting Professor ISBN-10: 0618176519 pg 212
2. ↑ Stock Investing for Dummies‬ By Paul Mladjenovic pg22 ISBN-10: 0470401141

Sumflow 16:02, October 9, 2010 (PDT)

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