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By Selena Maranjian (TMF Selena)
June 4, 2002

Q. What's the difference between a private and a public company?

A. A private company is one that's privately owned -- usually by one or a few people. Its owners don't have to reveal much about their business. And most of us can't invest in it.

A public company is one that has sold a portion of itself to the public, via an initial public offering (IPO) of some shares of its stock. Therefore, it probably has hundreds or thousands of co-owners. If it's an American company trading on American stock exchanges, it's required, among other things, to file quarterly earnings reports with the Securities and Exchange Commission (SEC). These are also made available to shareholders and the public. A public company can't keep mum about how much it made in sales last year. It must report information like that -- its revenues, cost of sales, tax expenses, administration costs, debt load, cash level, and so on.

Here are a bunch of major companies that are private: Cargill, Subway, M&M Mars, Bertelsmann AG, Bechtel, Publix Super Markets, IKEA International, FMR Corp. (the parent of Fidelity Investments), Seiko Epson, Amway, DHL Worldwide Express, Virgin Group, Rosenbluth International, Penske, S.C. Johnson & Sons, Enterprise Rent-A-Car, Hallmark Cards, Borden, McCain Foods, Hyatt, National Amusements, Purdue Farms, McKinsey & Co., LEGO Company, and Domino's Pizza. Some of these firms offer shares to employees, but the rest of us are out of luck.

United Parcel Service (NYSE: UPS) was private until a few years ago, as was Goldman Sachs (NYSE: GS). Levi Strauss, once private, went public only to go private again. Just because an old, established firm is private doesn't mean it'll always be private.

If you'd like to make money in stocks, you'll have to stick to public companies. If you'd like to receive a handful of promising stock ideas each month, consider subscribing to our Motley Fool Select (which also offers a money-back guarantee).

If you have any questions, thoughts or opinions on this topic, share them with others on our discussion board for Ask the Fool.

This question and answer is adapted from The Motley Fool Money Guide: Answers to Your Questions About Saving, Spending and Investing. For answers to this and 499 other common money questions, check it out -- it's a handy resource.