Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is operating company?
Expert Solution
Step 1
The operating company is the actual manufacturer of a product or service. The operating company is usually owned by a parent company, whose source of revenue comes from taking percentage of profits from the operating company.
For example, let's say that Company A manufactures and sells tires. It's an operating company. It's also a subsidiary of Company B, which owns the tire factories and tire stores that Company A uses. Company B is a holding company.
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