Mobilarm Limited and Elemental Minerals Limited Businesses - Assignment Example

1. The two companies which had issued prospectus the current year are Mobilarm Limited and Elemental Minerals Limited. Mobilarm Limited is in the field of “developing marine solution which helps to reduce the number of casualties which happens on board”. (Mobilarm, 2010) The company has been a market leader and develops other product which helps in its successful operations. Elemental Minerals Limited is a company which is in the “exploration of gold and minerals in Australia and Africa”. (Elemental, 2010) Since its inception the company has done exploration work and is working towards more projects which strengthen their market reputation in the field. 2. The business model for both Mobilarm Limited and Elemental Minerals Limited was of a corporation which had not raised money from the public but had loans and other medium to raise the money. The companies also had chairman and financial offiers who presided the working of the company and was performing as a private limited company by capital raised from within. The reason for considering towards a public limited company was due to the advantage accrued to public limited companies which are as follows Limited Liability: Public limited companies give the advantage as it has “limited liability of the shareholders and their liability is to the extent till the amount contributed by them”. (Weber, 2009) The company in need of funds for future growth can “raise money by issuing shares as they have a provision to raise more capital”. (Weber, 2009) The company continues year after year even after “the director and chairman or any person associated with the company dies”. (Weber, 2009) Thus the company has existence till eternity This will thus provide both the companies the advantages to be big and compete at a national level. 3. The IPO’s of Mobilarm Limited and Elemental Minerals Limited are both underwritten and is a good sign for any company looking to raise capital. The characteristics of Mobilarm Limited IPO are that it highlights the area the company wishes to work on. This hereby presents the future earning potential as the prospectus highlights are “developing the Personal Locator Beacon which will help to trace individuals, different oil and off shore exploration plant the company is working upon, manner in which the funds raised will be used by diverting into research and core areas”. (Mobilarm IPO, 2010) This thus issues presented makes it a criteria for the IPO to be underwritten as it shows potential. The characteristics of Elemental Minerals Limited IPO are that it highlights “the performance of the company over the years and throwing light on the manner the company intends to perform, also highlighting different risk associated with the project and company shows concern and disclosure of information, the manner in which volatility in prices will affect the future prediction are also provided”. (Elemental Minerals Limited IPO, 2010) This thus highlights fact which makes it a criterion for the IPO to be underwritten. 4. The issuer of the prospectus has used various signalling methodology in the prospectus to ensure that the person who are using it are able to gauge the benefit from investing in the company. Mobilarm Limited have ensured that they have demonstrated the manner in which the “money raised form the shares will be utilized in various areas and the return they expect from the projects”. (Mobilarm IPO, 2010) They have also given details regarding the new projects and the future course of action the company intends to take for development in the future Elemental Minerals Limited on the other hand to ensure the signalling status has used the manner in which the funds will add value to the organisation. The company has also given signal regarding the “risk involved and the manner it will affect the earnings, the manner in which dividend will be provided and future projects the company intends to take”. (Elemental Minerals Limited IPO, 2010) The company uses this signal to ensure that “asymmetry in the information doesn’t lead towards the company having more information regarding the future project compared to the public”. (Firth & Tan, 1998) This helps the outsider to know the manner the company intends to use the funds which will act as a guide and based on the prospect they realize will invest in the company. The other signals the user could have used is the estimated earnings per share, the return on the stock and the contingency plans to deal with crisis. This could have been tools which could have demonstrated a better signalling and guided the investor to invest in the company. 5. Small business units are those “which are owned individually, have a small stature regarding the turnover and are not leaders in the field of operations”. (Allen, 2005) It is difficult to define a business as small or big as quantifying those would mean the business will have to shed off certain characteristics to meet it. On the whole a small business is one which is growing and is not a leader in its respective field. A look at the growth potential and the way Mobilarm Limited and Elemental Minerals Limited are performing and are not market leaders shows the fact that they are a small business unit. When we consider from the number of employees perspective it is seen that Mobilarm Limited and Elemental Minerals Limited have a lot of employees considering the definition which states it to be low. Still gauging an enterprise on the basis of employees is not a correct criterion as different authors have put a different limit on the number of employees as some saying it to be 100 some 500. So ignoring the aspect of employees Mobilarm Limited and Elemental Minerals Limited seems to be a small business unit. Small business units thus falls under the purview where it is trying to grow and to ensure that growth the company is using different means and tools to reach it. Business units which are looking towards integrating their process for further growth and are following some leaders in the organisation are small business units as they have the capability to grow and rise to the horizon of a business leader. Thus, small business units are those which are not leaders and are integrating their business to become leaders and are operated on a scale which is smaller that market leaders. References Allen S, 2005, “SBA struggles to define small business”, About.com, The New York Times Company Firth M & Tan C, 1998, “Auditor Quality, Signalling, and the valuation of Initial Public Offering”, Journal of Business Finance & Accounting, Volume 25, Page 145-165 Elemental, 2010, “Elemental Minerals Limited”, retrieved on September 18, 2010 from http://www.elementalminerals.com.au/ Elemental Minerals Limited IPO, 2010, “Elemental Minerals Limited Prospectus”, ASX Mobilarm, 2010, “Mobilarm Limited”, retrieved on September 18, 2010 from www.mobilarm.com Mobilarm IPO, 2010, “Mobilarm IPO Overview”, ASX Weber S, 2009, “Business structure: Sole trader, limited company, partnership or LLP”, Barclays Business Banking, Byte Start Read More