Why do companies go bankrupt when their stock price drops?
If companies only make money from stocks during IPO, why do they go bankrupt when the stock price drops? I can't make the connection.
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Answer by neodracolith
The stocks are their income. If people sell their stock, the price goes down, thus less income. If everyone sells their stock, the company has no income, and can't stay in business.
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stock Artist Alexandra Chowaniac with her Drawing at SOMARTS
Image by Lynn Friedman
Orignal From: Why do companies go bankrupt when their stock price drops? and stock Artist Alexandra Chowaniac with her Drawing at SOMARTS
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