E-Commerce and Innovation
Deep Analysis
This paper highlights the financial activities of two companies, namely Webinact and aso.tv. The main economic activity for the two companies entails production and streaming of news, editing and filming programs for various audiences throughout the worldwide. To start with, aso.tv is responsible for producing and co-producing over 700 hours of programmes annually. Furthermore, the company broadcasts over 8000 hours of sports time to its large clientele base of about 5 billion viewers worldwide. The company manages to distribute all these programmes and sports documentations using of about 200 different channels across the globe. On the other hand, Webinact was founded by Shane Smith and it is located in Southwark, London. The company has exclusively partnered with International Capital connections ltd. with the intention of providing both a live coverage and quality production at an affordable cost to the viewers (Ross, Westerfield & Jaffe 2005).
Scorecard Criteria
Webinact and aso.tv utilize the principle of crowdsourcing in order to fund its finances and other operating costs throughout the year. With the help of crowdsourcing the companies solicit the contributions from their large base of online community all over the world. Among other major objectives of the company, Webinact is interested in investing in additional opportunities that may become available and viable. The companies which were looking for investment tried to incorporate the services offered by Webinact into large economic sectors such as sports communications, the local government, E-learning sectors and funding various companies during their early stages among others (Brigham & Ehrhardt 2011).
Webinact has issued a number of shares to its shareholders in order to raise capital for the company in form of equity. In accordance with the statistics, the company has offered both type A, which has full voting rights and Type B shares. In order to qualify for type A shares, the shareholders are required to invest an equivalent amount of 5000 pounds or even more. Those shareholders who invest less than 5000 pounds will acquire type B shares which do not have voting rights. Directors and the owners value their organization highly due to its enormous growth and success (Norreklit 2003, p. 96). For instance, the company managed to raise 25.6 million pounds in terms of capital requirements in 2000. However, the latest statistics have shown that the company manages 45000 webcasts every month which is equivalent to more than half a million events every year (Kenny 2003, p. 78). Consequently it makes a great source of revenue for the company which has resulted in the growth of its value. Conversely, aso.tv has grown over the years and it is fully operated in more than 190 countries. As a result of its growth, the value of the company has rocketed over the years.
Table 1
Scorecard Criteria
Financial Analysis
Company ROE(Return on equity) Net profit margin
Total asset turnover Asset/equity
Webinact 1.277 .096 .246 13.316
aso.tv .260 .038 .309 6.919
Risks
Examples of the major risks that are associated with efficacious funding of the two companies comprise of inadequate dividends, dilution of shares as a result of increased number of shareholders, loss of investment opportunities and illiquidity among others. The risk of inadequate dividends arises when the companies are not able to fully pay the shareholders the outstanding amount (Mohamed & McCowan 2010). The risk of illiquidity refers to the period when the companies are not able to turn the non-current assets into cash and cash equivalents with the intention of offsetting their financial obligations. Similarly, the risk of dilution is the reason of value of shares held by existing shareholders which is subjected to depreciation of the company as a result of the companies’ policy to attract more shareholders (Bruner 2003, p. 68). Lastly, Webinact and aso.tv have to contend with the risk of loss of investment capital and opportunities. This happens when the companies record annual financial losses and are not able to recoup the total financial capital invested in the projects.
Reference List
Brigham, EF & Ehrhardt, MC, 2011, Financial management theory and practice. Cengage Learning, Stamford, CT. Print
Bruner, RF, 2003, Case Studies in Finance: Managing for Corporate Value Creation (4th Ed). : McGraw – Hill Irwin, Boston, MA. Print
Kenny, J 2003, ‘Effective project management for strategic innovation and change in an organizational context’, Project Management Journal, vol.34, no.1, pp. 43-53.
Mohamed, S. & McCowan. A 2010, ‘Modeling Project Investment Decisions under uncertainty using possibility theory’, International Journal of Project Management, vol. 19, no. 4, pp. 231-241.
Norreklit, H, 2003, ‘The balanced scorecard: What is the score? A rhetorical analysis of the balanced scorecard’, Accounting Organisations and Society, vol. 28, pp. 591 – 619.
Ross, AS, Westerfield, RW & Jaffe, J, 2005, Essentials of Corporate Finance (7th ed.). McGraw-Hill, Boston, MA. Print
