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Q.

How do companies create value to the investors?

Asked by Good Citizen, 28 Jul '10 02:54 pm
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Answers (2)

 
1.

Value for investors can be made only if the company consistently holds a good management record, good revenue generation, good net profit and sound financial management by keeping the debt to equity ratio to the minimum so that at no stage does it flounder or get weighed down by heavy interest payments that can retard its cash flow, which in turn will go on to effect capacity expansion or growth into a bigger company by whatever means - expansion or acquisition.

Real value can be created for investors only when the company is quoting at a higher price consistently so that, the chase for the stock is a never ending exercise. Dividends does help to a certain extend but dividends are always a small proportion of the profit generated, the major amount kept as internal reserve or used for expansion from internal accruals, possible only when they are generating good margins and thereby profit.

The value of a company is all about how investors perceive the stock - by their perception of ...more
Answered by Omega, 29 Jul '10 03:58 pm

 
  
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When they make profit and have good management overall :D
Answered by conviction, 28 Jul '10 03:02 pm

 
  
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