When the share price of a company move up (or down) will it benefit the company ? Say for example, a company has sold in market 1 lakh share of Rs 10 and got 1 crore as capital, if the price of share increase to Rs 20, how will that benefit the company ? Another related question, how is dividents paid, is it on the basis of the current share value or orginally issued share value ?
** Small correction in your question -1 lakh shares of Rs.10 is 10 Lakh in share capital, and not 1 Crs as you have mentioned
Dividend is paid on the Face value (for simplicity consider this as as the original issue value) of the stock.
Increasing share price has few benefits for the company..
1) The promoter wealth / net worth increases
2) The 'Securities Premium Reserve', (which appears on the liabilities side of balance sheet) increases, thereby strengthening the balance sheet
3) Shareholders of the company will be happy because of capital appreciation
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