Changes In Stock Prices – Changes In Earnings

 

The reason for a trader to either earn profits or losses is because of the fluctuations in the prices of the assets and stocks that are getting traded in the market. The best thing about investments in stocks or assets is the opportunity to either earn a profit or experience a loss when the prices of the same go up or fall low. Now, this increase or decrease in the prices of the stocks is because of the increase or decrease in the demand and supply of the same in the market. Now in such a situation, it becomes important for a trader or an investor to make the best decision regarding his investments in a particular stock or asset. This is very important because it is a wise investment decision that would result in a profit or earnings for a trader.

  • To know the impact of stock market fluctuations on business and its performance, it is very important to keep an eye on the earnings made by a company. Earnings of a company are nothing but the amount that is left in the accounts of the company after it has finished paying all its liabilities. Now it is this that would determine the financial status of the company. Now how does this impact the stock prices? Yes, when a company has a good balance in the name of earnings in its account, the share prices of the company`s stocks automatically increases and when the earnings are low, the share prices automatically go down.
  • The dividend is another important thing that determines stock prices. The dividend is distributed to the shareholders when the company experiences share profits or profits in a trading activity. So when a company declares its dividends, the stock prices of the shares of the company increases because investors enjoy ownership rights in the company. On the other hand, when the dividend declaration exists for a longer time, the prices of the stocks automatically start falling down thereby decreasing the stock prices.
  • In many situations, companies try to buy back their shares with the sole aim of increasing the value of their own shares. They also opt to buy back their shares when they feel that their stocks are getting undervalued. In such situations to improve and increase its prices, they also opt for spitting their shares.

So, these are some of the reasons for how and why the share prices of a company impact and influence the business performance of a company.

 

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