Question

When do firms receive money from a stock sale in

their firm and when do they not receive money?

Short answer

When a company's stock is sold on the primary market in an IPO, the company receives money.

Step-by-step solution

Step 1. Definition

A financial security that represents the ownership of a fraction of the company is known as a stock or share.

Step 2. Explanation

A firm receives money when it sells its own stock to the public through an initial public offering (IPO). Here the public can be a company, a person, etc. When the stock is resold in the secondary market, in this situation the firm doesn’t receive money instead the person who sold receives the money.