If a company's stock crashes, does the company actually lose any of its own money?

I am a financial economist and the answer is in almost all cases no, it has absolutely no impact at all. The price of a stock is the price an existing shareholder will get if they try and sell it to a potential future shareholder.

There are only three circumstances where a crash in stock prices can impact the companies cash.

1) Where it has debt covenants tied to its stock price and must pay down debt in the case of a fall in price (this is the really stupid covenant that brought Enron down). You rarely see these anymore now that the stock bubble is over, they were really dumb ideas.

2) The company has a defined benefit pension plan partially funded with company stock. A drop in value of any asset in the plan is a cost to the company.

3) The company is preparing an offering either of a bond issue with warrants attached to the bond, tied to the stock price, or a subsequent stock issuance. In those cases, the company may not be able to get additional funding.

IBM's price, for example, or Apple's price could fall to one penny per hundred shares, but the company would see no direct impact. It would still be worth, in intrinsic value, the same amount as before the crash, but no one will buy it and since a stock without a price is essentially worthless, you would see angry shareholders screaming at management to do something, which is also usually outside management's ability to do anything about in the short term. Such a circumstance can be a great opportunity to make future money.

Yes a company can go bankrupt from a stock crash. A stock that crashes has a very hard time getting funds to bring it's self out of troubled waters. With the decrease in stock price comes the reason the stock fell. This usually means that the companies assets have been revalued to the number of shares they are holding multiplied by the current stock price. Receantly Sears was able to aquire K-mart exactly this way. When Martha Stewart got discovered for the crook she is k-marts stock took a beating just like hers did. At that time Sears paid about 1/10th the true value of the tangible assets of K-mart. This is refered to as raiding when it is a hostile take over.

A company's stock hardly ever crashes for no reason. It could be temporarily oversold. The market isnt efficient in the short term. But the value of the stock is the present value of future cash flows. If it crashes it usually means lower value of those cash flows for shareholders. It could be because of lower earnings than expected. Or high debt, which could lead to lower cash flows to shareholders. And that debt could possibly lead to bankruptcy. So if a stock crashes it usually means the company isnt making money , and the shareholders lose money because the stock crashed. The assets of the company still have value, but the company, the entity, no longer does, because they arent generating cash flows from those assets, and/or they have too much debt.

No simple answer to this question. The stock prices coming down not entirely due to the bad functioning of this company. Political situations, Market sentiments, market trend, financial results, better performance of similar company, FII pulling out money market- everything contributes. Some mischiief institutional investors can also do damage . One has to study the company reports or get the opinions of experts-available in net. Don't get panic. If the company is fundamentallly strong hold the stocks. It will pay you.

No, the external valuation of the internal assets changes. For example, I might decide that a lamp is worth less money to me now, but it doesn't change the intrinsic properties or composition of the lamp.