Liquidating stock

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A company will pay liquidating dividends if management believes the market is not valuing the business favorably if it is trying to sell it.

For example, if Tablet Universe's management believes the company is worth 0 million but the highest offer it receives to purchase the company is 0 million, it may decide to liquidate by selling all of the company assets (items of value that it owns) and pay its liabilities (debts that it owes) instead.

After the regular dividend is paid out, whatever is left over is the liquidating dividend balance.Never advertise it as a going out of business sale.Always describe it as "liquidating" the business and you will attract a higher quality buyer than when you advertise that you are going out of business.It could also pay a liquidating dividend if it chooses to close voluntarily or it is forced to close in the event of bankruptcy where it doesn't have enough assets to pay all of its outstanding liabilities.A company pays liquidating dividends to its shareholders after it has paid its obligations to its creditors or the individuals to whom it owes money such as suppliers, banks for loans, employees and the government for tax payments.

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