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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Consolidation 3
how does a company benefit when its share price goes up in trading on stock exchange?
when we consolidate we account for associates and joint ventures according to equity accounting and add in the value of investment group’s share of profits.
Well, it doesn’t directly benefit the company whose shares increase in value on the stock exchange. But it does increase market capitalisation, makes the company “worth” more, potentially makes it easier for the company to borrow money, it raises the company profile and could even elevate it into the “top 100” or “top 350”
OK?
