This means that the business sells off not just any inventory it may have, but its tools of production, building and any other assets it may have.
When a corporation decides to shut down, it liquidates its assets.
A liquidating dividend is used when a corporation is dissolving and it needs to distribute its assets to its shareholders.
Paid after satisfying all corporate debts, the liquidating dividend is meant to provide a return on investment.
The term liquidating dividend refers to the process of providing shareholders with a partial or full distribution of their capital investment in the company.
Liquidating dividends are typically paid when a company is going out of business or has sold a portion of the enterprise.