If a stock price of a company reduces, then it affects what in the balance sheet when given to choose -Current Assets, Current Liabilities, Net worth?



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There is a question related to this in the session's quiz and the answer was none of the above so I would like to know how the net worth of the company is not affected when the stock price reduces?

As I strongly feel net worth of a company will be affected if the stock price reduces as the company's profitability is reduced or less and this has an direct impact in the net worth.

1 Answer(s)


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Stock price just reflects the market value of a stock of a company -- It varies depending on the investor sentiments & their future growth expectations of that particular firm. It will actually be the other way -- Company's profitability affects the company's stock price to an extent since investors feel more confident about the stock & buy the same if the firm shows good profitability for a quarter -- Thereby increasing its stock price due to its increased demand.