Business Valuation

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Ambertech Technology Ltd

Letter of Transmittal

16th October 2009

Mr Mukesh Garg

Department of Accounting and Finance

Monash University 400 Dandenong Road

Caulfield Vic 3145

Dear Mr Mukesh Garg,

Ref: Business Valuation Group Project 2 in Semesters 2, Year 2009

Here is the report you requested on 16th October, 2009. This report attempts to analyze Ambertech Technology Limited by industry analysis, accounting analysis, financial analysis and evaluation and forecasting from ***to ***** through ***** and relative valuation multiple models.

We would like to express our sincere thanks for your valuable guidance and support during the research and completion for this assignment. Please feel free to contact us if you have any further queries regarding this report.

Yours sincerely,

Shuai LI

ID 21643873


ID 21631239

Table of Contents

Introduction 3

Purpose 3

Scope 4

Methodology 4

Limitation 4

Business and Industry analysis 5

Economic Analysis 5

Business strategy analysis 6

Competitive advantages 6

SWOT Analysis 7

Industry Analysis: Hardware and Electronic Equipment Industry 8

Corporate Governance Analysis 10

Accounting analysis 11

Key accounting policies 11

Assessing the accounting flexibility 11

Evaluate Accounting strategy 12

Evaluate the Quality of Disclosure 12

Earnings quality assessment 13

Identify the red flags 14

Sales growth vs. Receivables 14

Plant and Equipment Treatment 14

Goodwill Treatment 14

Foreign currency transactions and Balances 15

Changes in tax 15

Financial Analysis 16

Evaluating operating management 16

Decomposition of ROE 16

Common-sized Income statement and profitability ratios 17

Evaluating Investment management 19

Working capital management 19

Long term assets management 20

Evaluating financial leverage 21

Sustainable growth rate 24

Cash flow analysis 25

Cost of Equity and WACC 26

Distressed Analysis 28

Altman Model 28

Castagna and Matolcsy Model 29

Forecast and Valuation Analysis 30

Sales growth analysis 30

Reasonable Assumptions for forecasting purpose:...