As a financial expert, kindly make me understand what these mean:
1. A company
2. A Holding company
3. A subsidiary company
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As a financial expert, kindly make me understand what these mean:
1. A company
2. A Holding company
3. A subsidiary company
Understanding Company, Holding Company, and Subsidiary Company is very important when analyzing investments, financial statements, and even commercial papers. Let's break it down simply and professionally. 1. A Company A Company is simply a legal business entity created to carry out business activitRead more
Understanding Company, Holding Company, and Subsidiary Company is very important when analyzing investments, financial statements, and even commercial papers. Let’s break it down simply and professionally.
See less1. A Company
A Company is simply a legal business entity created to carry out business activities.
It can:
Make profits
Own assets
Borrow money
Be sued or sue
Issue shares
Example
Dangote Cement Plc is a company because:
It produces cement
It earns revenue
It has shareholders
It publishes financial statements
So, any registered business entity is a company.
2. A Holding Company
A Holding Company is a company that does not mainly produce goods or services but owns shares in other companies.
Its main purpose is:
Control other companies
Own investments
Manage subsidiaries
Example
Dangote Industries Limited is a Holding Company because it owns:
Dangote Cement Plc
Dangote Sugar Refinery Plc
NASCON Allied Industries Plc
Dangote Industries controls these companies.
So:
Holding company = Parent company
3. A Subsidiary Company
A Subsidiary Company is a company that is **owned