MGMT 1 Lecture Notes - Lecture 1: Initial Public Offering, Merage Family, Retained Earnings
Document Summary
Key thing to remember about stock is that stockholders become owners in the organization. Corporation"s board of directors decide the number of shares of stock that will be offered to investors for purchase. Initial public offering (ipo) first time a company sells its stock to the general public. By no means easy or automatic can issue stock for public purchase only if it meets requirements by the sec. Can offer different stock such as common or preferred. Retained earnings often are a major source of long-term funds, especially for small businesses since they have few financing alternatives. Large corporations also depend on retained earnings for long-term funding. Retained earnings are the most favored source of meeting long-term capital needs creates no new ownership in the firm, which stock does. A company that uses them saves interest payments, dividends, and possible underwriting fees.
