Which of the following is the best definition of liquidation?

A) The tax saving attained by a firm from interest expense.
B) Termination of the firm as a going concern.
C) The value of the firm is independent of its capital structure.
D) A firm's cost of equity capital is a positive linear function of its capital structure.
E) Financial restructuring of a failing firm to attempt to continue operations as a going concern.

Liquidation

The process of converting assets into cash or cash equivalents by selling them in the market.

Going Concern

An accounting assumption that a company will continue to operate for the foreseeable future, thus justifying the presence of its assets and liabilities.

Financial Restructuring

The process of reorganizing a company's financial structure, often involving re-negotiation of debts and equity, to improve its liquidity and ensure its survival.