Definition of public company
Public company, also known as public corporation, is a company whose shares are traded publicly and such a company has plenty of shareholders. The company offers its shares to the company as a public offering and the daily value of the company is evaluated because of daily trading that happens in the company.
Public company have plenty of advantages when compared to a private company that is the company can easily recover when facing losses by selling all of its shares. This of course will take place only by increasing the rigid rules and more Government inspection.
Features of a public company
The following are the features of a public company:
- A public company is created by keeping in mind the Act of the state.
- It is owned by the Government, and the Private corporations are not allowed to purchase shares in the Public Corporation
- The public company is managed by a Board of Directors that are selected from a group of people selected by the Government.
- The capital is financed by the Government.
Advantages of pubic company
There are plenty of advantages of public company. They are:
- A public corporation can manage its own affairs on its own being an independent setup
- It comprises of board of directors that are experts in various fields. The corporation has the best in their company.
- It can have a unremitting survival despite the change in the Government.
Disadvantages of pubiccompany
There are a few advantages of running a public company. They are:
- The company’s finances are open to public. The public who invests in the business would be aware of the methodologies that the corporation adopts to run the business.
- If the company grows too much, it can lead to the company’s bankruptcy.
A public company is answerable to the Government no matter what changes it decides to make with in the company. A public company has to abide by the rules that are laid out by the Securities and Exchange Commission, which includes disclosing financial statements to the shareholders who invest in the company.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
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Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
- Accounts Payable Turnover Ratio
- Debt Service Coverage Ratio
- Solvency Ratio
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