Refer to the Chapter Opener on the InterGlobe Aviations Initial Public Offering. Briefly comment on the wide
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Refer to the Chapter Opener on the InterGlobe Aviation’s Initial Public Offering. Briefly comment on the wide range of questions raised there.
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Negative Networth Indigo Airlines Public Offering Interglobe Aviation, which owns IndiGo, is a low-cost airline headquartered at Gurgaon. It is the largest airline in India in terms of passengers flown with market share of 36-39% (2016). This consistently profitable airline caused a bit of a stir during its initial public offering (IPO) in October 2015. In spite of making a net profit of 640 crore during the June quarter, IndiGo reported negative networth of minus 139 crore as on 30th June. A big reason for this: 1,103 crore dividend that the promoters decided to pay themselves ahead of the offer. In accounting terms, Net Worth is the total owner's capital invested in a company. Refer to Section 2.1 wherin the term is introduced; a company's networth is a key indicator of its financial health. Stereotypically, chronically loss-making companies carry negative networth in their balance sheet. This is why even the statutory auditors examining a company's books of accounts are required to make a special mention to shareholders in their report, if they find that the company has run up a negative networth in any accounting period.
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Financial Accounting For Management
ISBN: 9789385965661
4th Edition
Authors: Neelakantan Ramachandran, Ram Kumar Kakani
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