What Is the Minimum Amount That Shareholders Should Expect to Receive

question 136

Multiple Choice

What is the minimum amount that shareholders should expect to receive in the event of a complete corporate liquidation?

• A) Market value of equity.
• B) Book value of equity.
• C) Zero.
• D) Shareholders may be required to pay to be liquidated.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing shareholders' ownership.

Earnings

The amount by which revenues exceed expenses.

Outstanding Shares

The aggregate amount of a company's shares that have been distributed and are owned by investors.

Stockholders' Equity

Represents the equity stake currently held on a company’s balance sheet by its shareholders, calculated as the company's total assets minus its total liabilities.