Time Value of Money (Using General Motors as the chosen company) Time Value of Money is one of the most important concepts in the financial world. The principles of time value analysis have many applications, ranging from setting up schedules for paying
Initial public offerings (General Motors) 2
TUI University
Mark A. Bullock
FIN501 - Strategic Corporate Finance
Module 1 SLP
Initial public offerings (General Motors)
Dr. Geoffrey Clarkson – P
January 22, 2012
Initial public offerings (General Motors)
For my SLP (Session Long Project) concerning the Initial Public companies, I considered reviewing the General Motors Company. General Motors which is regularly referred by the acronym GM is a multinational automotive firm which is located within the U.S. The GM firm has its headquarters within Detroit, Michigan. General Motors was actually the first runners up in the World’s automaker rankings compiled within the year of 2010. The company has offered employment to more than 209,000 individuals and it conducts its business operations within approximately 154 different countries. The company is mainly involved with the production of cars along with trucks (General Motors, 2012). The vehicles manufactured by GM are sold under various brand names. The GM’s brands which can also be termed as divisions are such as Chevrolet, Opel, Holden, Buick, Vauxhall, GMC as well as Cadillac.
In the course of 2009; the company had to undergo through a comprehensive reorganization process in order to resolve its financial troubles. Actually, the financial troubles led the firm into bankruptcy. In the process of undergoing reincorporation, the firm was subjected to a novel IPO. During 2009, the company is said to have marketed approximately 6, 5000,000 cars along with trucks, within the international market. The highest GM’s sales growth was experienced within China were they sales grew by 66.9% in the year of 2009. Since 2010, General Motors has always making good profits annually (General Motors, 2012). In 2010, the company actually earned approximately 4.7 billion USD. During the initial six months of 2011, the company managed to regain its previous position of being the leading automaker manufacturer internationally.
The reason which made me to review the General Motors firm is specifically because it’s one of the widely renowned vehicle manufacturers internationally. In addition, the company managed to undergo a complete change after been reorganized in the year 2009. Moreover, one will be attempted to study the financial trends experienced by the company because the firm made the most successful IPO ever since time immemorial (Barabba, 2004). It is also interesting to learn how the company managed to record growth in sales despite the biting recession.
The GM’s IPO is assumed to be the most successful in the stock exchange history (Espinasse, 2011). Through the IPO, the company actually managed to raise eighteen billion USD. The proceeds gained from IPO actually assisted the company to resurrect from bankruptcy and re-attain its dominancy in the motor world (Barabba, 2004). It was established that the GM’s IPO made 40% of the United States’ IPO collections in 2010. Actually, as at present, the stock price of the GM’s share is considerably below the IPO price. The share price since the IPO is considered to have dropped by almost 33%. Nevertheless, the firm has managed to exceed the Wall-Street anticipations regarding its revenues as well as profits.
The SLP Module 1 is quite beneficial as it enables learners to gain knowledge about IPO. It makes the learners to become aware of the reasons behind various companies opting to undertake IPO. Upon going through the module, students learn that IPOs have both advantages along with disadvantages. Advantages of IPO include assisting firms to access a cheap capital source. It also facilitates acquisitions along with increasing the equity holders’ liquidity amongst other advantages (Espinasse, 2011). The most significant disadvantage is that IPOs come along with significant marketing costs and there is the risk of failing to raise the desired funds. Generally, the SLP Module 1 is quite informative to the students business-wise.
References
Barabba, V. P. (2004). Surviving Transformation: Lessons from GM's Surprising Turnaround . New York, NY: Oxford University Press.
General Motors. Company Profile. Retrieved on 9th January, 2012. From http://www.gm.com/
Espinasse, P. (2011). IPO: A global guide. Hong Kong: Hong Kong University Press.