CTS
Well-known member
- Joined
- Aug 27, 2003
- Posts
- 81
You guys crack me up...
In your very simple example maybe a small home based business could survive at no profit where capital improvements are never needed or R&D is not required. Certainly not a publicly traded company. Businesses rely on profits to buy new inventory, expand operations and finance product development. Without profit, a business would stagnate and risk losing its market share to other competitors. Large businesses need to raise profits to keep share prices high and pay dividends to shareholders. If a large business does not generate a profit, its share price falls, which means it cannot raise as much money with share sales and cannot borrow from banks as easily. Companies with falling share prices often become the targets of hostile takeovers by rival firms. Sound familiar?
In your very simple example maybe a small home based business could survive at no profit where capital improvements are never needed or R&D is not required. Certainly not a publicly traded company. Businesses rely on profits to buy new inventory, expand operations and finance product development. Without profit, a business would stagnate and risk losing its market share to other competitors. Large businesses need to raise profits to keep share prices high and pay dividends to shareholders. If a large business does not generate a profit, its share price falls, which means it cannot raise as much money with share sales and cannot borrow from banks as easily. Companies with falling share prices often become the targets of hostile takeovers by rival firms. Sound familiar?