Liquidation Value: All valuations consider present and future values. Value is generated over time. It begins in the present and extends into the future. This ongoing value is referred to as continuing value. Countries, corporations, households, and individuals set current values based on the belief that the present state will persist. What happens if it does not continue? It loses its future value. This state is known as the liquidation value. For example, this occurs if you quit your business. Almost all investments involve buying and selling assets based on their future worth. If you buy at a price lower than the liquidation value, you make a significant profit. If you buy at the liquidation value, you pay a fair price. If you pay more, you risk overpaying or buying a bubble. Value depends on time. Continuing a process is key to valuation. - Joseph’s “just my thoughts”
The concept of “seed money” is crucial in business and investment; it is a notion that cannot be overemphasized. This “seed money” is termed “capital money” in accounting. If a person who is 50% profitable loses 40% simultaneously and continuously finds himself in this situation, will he become wealthy? No! Due to the 40% loss, the seed money will gradually diminish; as investments are repeated, profits will decline, leading to financial hardship. In any business or investment, it is essential to know how to preserve your seed money, and when you face losses, you must act decisively, understanding how to swiftly extricate yourself from the situation. - Joseph’s “just my thoughts”