Once someone buys stocks from a company at the IPO, in what way does the company generate money?
Shera asks:
Even though they generated money and capital in the beginning, won’t they still have to pay it back in the end if the company closes down. So then the money won’t be theirs…
Even though they generated money and capital in the beginning, won’t they still have to pay it back in the end if the company closes down. So then the money won’t be theirs…
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If they are an ice cream company they sell ice cream and make money. Etc.
Stock entitles you to a share of the earnings of the company. However, if the company goes bankrupt you are entitled to nothing.
No, they dont have to pay the money back.
Once you buy stock, you own a share of that company. If they close down or go bankrupt, then you receive nothing. However if they do very well and someone buys them (merger), then they will pay you for your shares. If the company goes private again, then they will also pay you for your shares. The price will be detrermined by what the company is worth.
You, as a common stock holder is the one actually own part of the company except that you do not have a lot of says. There is a group of people who are running the company for you.
During the IPO, the company first sells a portion of the company to the public to the absorb working capital. On an on going basis, the company sells the goods or services to generate the revenue. On the other hand, the company might generate bonds or borrow money from other financial instituations, companies, known as creditors for some other uses. They are the one who would get their hands on the money and assets when the company goes down.
Do you seriously think there are still money left?