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Why people want to buy a share in a company even if the company has not made profit?
Anjaladhikari
because they expect the stock price to go up
Wiki User
∙ 13y ago
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What are the difference between equity share capital and preference shares capital and examples?
Preference share capital is type of capital which has preference on other type of share capital as preference share capital may have more profit ratio than other and it is paid first from profit of company and preference share holders get there share even if company has earn no profit. Equity share capital is share capital on which share holders get share from profit in the last after paying every other obligation on company. Detail answer available in related link.
What is a proportion of a company profit paid to stockholders?
The proportion of profit paid to share holders is not fixed it depends on company policy as well as situation as well if company has feasible investing opportunities then it will opt for no dividend or if no opportunity then it may opt for even 100% dividend to shareholders.
What is cumulative preference share?
preference shares has the preferred right to get profit or dividend from profit of the company every year. If company not pay the profit in any year even then in cummulative preference shares case profit for that year keep continues to add until it is paid on the other hand in case of non-cummulative preference shares if company not declare profit distribution for any year it will not add to next period.
What do companies not payout all their profit?
It depends on company policies, if company has good investing opportunities available they may not pay even any dividend or portion of dividend and if they don't have investing opportunities they can distribute full amount of net income to share holders.
If gross profit ratio is the same for two years what is the financial position of this company?
If the gross profit ratio is the same for two years, the financial position of the company is stable. It means the company is at the same break even point as the year before, but does not constitute growth of profit.
What are the benefits of holding a company's share?
1. If you hold shares of a company, you are one of the owners of that company. Every year the company would send you its annual statement, its profit & loss accounts etc. Also if they have made a good profit, they would even declare a Dividend. A Dividend is something like Interest that you receive from a bank for holding a deposit with it. The only difference is that you may or may not get Dividends. Assuming you hold 100 shares of XYZ limited and they declare a dividend of 50% per equity share it means you would be getting Rs. 5/- per share that you hold in the company. The Dividend % that any company declares is on the Face value of its share. That is you would be getting Rs. 500/- as a dividend. 2. Whenever the company takes any major decisions like change of the CEO or Acquisition of another company etc, you would be communicated. There would be a share holders meeting and only if at least 51% of the company's share holders approve the corporate action would happen. 3. As you know, the shares of the company would be traded in the secondary market everyday. Say after 3 months the Market value of the share of XYZ limited has become Rs. 70 per share, you can sell the shares of XYZ and make Rs. 7000/- which is a profit of Rs. 2000/- in 3 months
If company wants to break-even early?
more preference share
What was probably true about contracts between landowner and sharecropper?
It is 'probably true' that all these contracts heavily favored the landowner. He kept the books and could manipulate costs and profits at will. And of course: no profit, no profit share and payment for the sharecropper. Also, it is true that many landowners had a 'company store' that the sharecroppers were obliged to use. So, even if there was a profit share, most or all of it went to the payment of the debt run up at that store.
Why does a business exist?
A business simply exists to make the shareholders more wealthy. The people who own the company wether it is a rich tycoon, a single operator of a business or even the government. The real question is what do share holders do with the retained profit, a tycoon may keep it for them selves, a single operator may give it to charity and the government very offen will re invest and serve the public as a non profit organisation
How can profit make a company more effective and competitive?
Profit can make a company more effective and competitive in the market in various ways. The company will have more resources which it can pump into the business and do better promotions and adverts which will translate to even more profits.
What is Cumulative preferred?
preference shares has the preferred right to get profit or dividend from profit of the company every year. If company not pay the profit in any year even then in cummulative preference shares case profit for that year keep continues to add until it is paid on the other hand in case of non-cummulative preference shares if company not declare profit distribution for any year it will not add to next period.
What are a firms profit at the break-even point?
Break Even Point: It is the point where firm's at no profit no loss situation/position that's why it is called break-even point. So at this point firms has no profit no loss and it is the point where firm's able to achieved all expenses of operation and after this point whatever sales made by firm goes to profit of company.
