Which financial term refers to the sale of assets to meet liabilities?

The term that refers to the sale of assets to meet liabilities is liquidation. This process typically occurs when a business is unable to meet its financial obligations, leading to a situation where it must convert its assets into cash. The primary goal of liquidation is to pay off creditors by selling off the company's assets, which may include inventory, equipment, or real estate.

In a liquidation scenario, the assets are often sold at market value, and the cash generated is used to settle outstanding debts. This is particularly relevant in cases of bankruptcy or when a business ceases operations, as it prioritizes satisfying creditors before any potential distribution of remaining assets to owners or shareholders. Understanding liquidation is crucial for managing financial distress effectively, as it highlights the importance of liquidity and asset management in business operations.