Financial Analysis and Business Valuation Report: Cleanaway Management

This report provides a comprehensive business valuation and financial analysis of Cleanaway Waste Management Limited. It begins with an introduction to the company and its operations within the Australian waste management industry. The report then delves into a macroeconomic analysis, assessing the economic environment and relevant factors such as GDP, unemployment, inflation, and interest rates, and their impact on Cleanaway's performance. An industry analysis follows, utilizing Porter's Five Forces model to evaluate the competitive landscape, including rivalry, threats from new entrants and substitutes, and the bargaining power of suppliers and customers. The report also includes a business strategy analysis, evaluating Cleanaway's strategic positioning and the sustainability of its approach. Finally, an accounting analysis is conducted to identify key accounting policies, assess accounting flexibility, strategy, and disclosure quality, and detect potential distortions in financial information. The report concludes with a summary of findings and recommendations based on the analyses.

Running head: BUSINESS VALUATION AND FINANCIAL ANALYSIS
Business Valuation and Financial Analysis
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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Table of Contents
Introduction......................................................................................................................................3
Macroeconomic Analysis................................................................................................................4
Economic Environment related to Cleanaway Waste Management Limited..............................4
Macroeconomic factors that have an effect on the performance of Cleanaway Waste
Management Limited...................................................................................................................5
Influence of Global Economy on the company over the last 5 years..........................................7
Future Anticipation......................................................................................................................7
Industry Analysis.............................................................................................................................8
Evaluating the level of competition in the industry where Cleanaway Waste management
operates in and uses Porter’s five forces model...........................................................................8
Rivalry from existing competitors...............................................................................................9
Threat from new entrants.............................................................................................................9
Threat from substitute products.................................................................................................11
Bargaining power of suppliers...................................................................................................11
Bargaining power of customers.................................................................................................12
Business strategy analysis..............................................................................................................12
Strategy demonstrate of the chosen firm...................................................................................12
Evaluation of the company’s strategy........................................................................................14
Evaluation of the sustainability of the company’s strategy...........................................................18
Accounting analysis:......................................................................................................................19

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Identifying the major accounting policies:................................................................................19
Dissecting the flexibility in accounting:....................................................................................20
Assessing the strategy of accounting:........................................................................................21
Dissecting the overall disclosure quality:..................................................................................21
Detecting the potential red flags (distortion of information):....................................................22
Rectifying the distortions in accounting:...................................................................................22
Conclusion.....................................................................................................................................23
Reference List................................................................................................................................24

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Introduction
The improvement and the innovation in the science and technology in the current global
economy in which the organizations perform compare their business activities with respect to the
highlighted industrial benchmark (Rathi, Khanduja and Sharma 2015). Therefore, this report is
being prepared in order to understand the financial position and the business valuation of
Cleanaway Waste Management Limited. The analysis of the discussed traits is only possible by
taking help of the data that is available with respect to the company in their annual reports and
even from various other journals and internet sources. The use of the Australian Annual report
has even been influential for gaining statistics and figures about the waste and management
technology. Cleanaway Waste Management Limited is an organization which is enlisted in the
Australian Stock Exchange and performs under the waste and clean industrial sector. Cleanaway
Waste Management Limited is one of the oldest and well known waste management
organizations concentrating on keeping the Australian environment free from pollution and
maintaining a green and waste free ecosystem.
Cleanaway Waste Management Limited is a developing organization and the company
has been steadily maintaining their profit at a significant margin in order to survive in the market
in an effective manner. The increase in the degree of competition with the advent of new waste
management industries has compelled Cleanaway Waste Management Limited to undertake
several analyses in order to understand their current operational position in the economy. The
company has therefore made use of analytical mechanisms like the evaluation of the business
strategy, analysis of the macroeconomic factors and evacuation of the industry and the
accounting assessment (Karim and Arif-Uz-Zaman 2013). The use of these techniques would be

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
influential for the better understanding of the business valuation and the financial situation of
Cleanaway Waste Management Limited.
Macroeconomic Analysis
Economic Environment related to Cleanaway Waste Management Limited
Economic environment comprises of the external factors that are related to the economy
of business and in a wider worldwide economy that affects the activities of the business. The
financial viewpoint of the Cleanaway Waste Management Limited has been to throw in a
optimistic way towards the concerned industry inside which the firm operates and hope to
provide a waste management system that is simple and free from financial threats and
challenges. Quezada, Walton and Sharma (2016) has clarified that environment of economy can
be divided into two sections, to be specific macro and micro environment. The two specified
sorts of the economic environment have a noteworthy part to play in assessing the accomplish
rate of the company. The functions and the roles in accordance to the communal economy are
undertaken by the company is undertaken in order to bring out effective operational results for
Cleanaway Waste Management Limited.
The firm focuses on the vital priority that guides them in picking up the data as for the
financial obligation for the stakeholders under consideration and embraces development of
different articles and reports that would be advantageous in creating mindfulness among the
customers. The firm even attempts a survey and investigation of the waste management services
that expects in perceiving the components that would be negative and the variables that would be
beneficial for the economic level.

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Macroeconomic factors that have an effect on the performance of Cleanaway Waste
Management Limited
The macroeconomic elements have been found to be an immense scope of economic
factors that can affect the finance related development and operations of the firm. The
macroeconomic components are comprehensive of the rise in population, Gross Domestic
Product (GDP), prices of oil, interest rate, unemployment and so on. Gross domestic product is
described to be the final goods and services that are produced within the geological limit of a
country, and the country under consideration in this paper is Australia as the paper focuses on the
business and financial assessment of Cleanaway Waste Management Limited. The parameters
that are macroeconomic in nature are utilised by keeping in mind the end goal to comprehend
and construct the extent of economic operations inside Australia. The rate of development in the
GDP in a country is specifically connected with the financial condition and operations of the
organization (Zaman 2014). The GDP of Australia has demonstrated an ascent of 2.8% during
the year 2015-2016 and the country has a lower extent of unemployment with a percentage
amount of 5.6%.
Despite the fact that the unemployment has descended, it has been watched that there has
been an ascent in the level of part time employment and underemployment in the nation at a
noteworthy level. The ascent in the level of part time employment and underemployment has
mostly been because of the accessibility of a large number of manpower in the market. The
principle factor for the expansion in the labour market has been migration of people from rural
and foreign population who are looking for employment and jobs (Sohal 2013). The ascent in the
level of underemployment and part time employment has inspired Cleanaway Waste
Management Limited to build their strategies and plans with the goal that they can embrace

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
different plans of activities to enhance their operations and grow their business to the next level.
Another economic variable has been the ascent in the export value in Australia. The ascent in the
value has proposed that international business exchange has been developing in an efficient way
subsequently diminishing the weight from the domestic organizations (García et al. 2014). The
ascent in the export value brings down the risk level of storing that would lessen squander and in
a way diminish the level of waste in the country. In the present situation, Australia does not an
increased level of inflation as the present rate of inflation has been 2% and is anticipated to rise
to 2.10% within the next two months.
The rate of inflation being so low is useful for Cleanaway Waste Management Limited as
they can purchase and acquire innovative and new waste management tools and serve the
country at a lesser cost. The utilization of these systems would build their working level and they
can even extend their operational boundary and in this manner expand their level of profit. The
rate of interest helps in computing the rate of earnings that has been predicted by the bank to lend
loans (Mohanty and Prakash 2014). The interest rate being higher brings down the degree of
investment in the business and specifically has an impact on the income level of the
organizations. This is because of the fact that the ascent in the interest rate brings down positive
Net Profit Value investments within a company. Nonetheless, lower interest rate rouses the
companies to borrow cash and roll out different developments in their business with the goal that
they can raise their level of earnings. The present interest rate of Australia is 1.5%, which is low
and with this respect Cleanaway Waste Management Limited to make use of several expenses
linked to the business so they can build their profitability and achieve their business goals. It is
seen that lower rate of interest diminishes the level of risk associated with the business and
enhances the degree of organizational goal (Wen and Meng 2015).

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Influence of Global Economy on the company over the last 5 years
With respect to the previous five years, the organization has been performing in an
inefficient way despite the fact that because of the slowdown of the economy there has been an
effect on the operations of the firm for a couple of years (Bakker 2014). The vulnerability in the
worldwide economy had prompted the deferment of the developments of Cleanaway Waste
Management Limited. The limitation of Cleanaway Waste Management Limited has even been
because of economic recession during the year 2008 to 2009. Conversely, the change in the
economy during the previous couple of years has been elemental for the firm to stand up and
perform effectively.
Future Anticipation
The GDP of the economy of Australian has been extending reasonably step by step and it
has been foreseen that Cleanaway Waste Management Limited will hope to differentiate their
business. Moreover, the rules and the policies constructed by Reserve Bank of Australia have
diminished the inflation level and in this manner helped in the company to attain their goals and
objectives (Sadgrove 2016). Thus, the performance financially by Cleanaway Waste
Management Limited would develop and in this manner assist the company to reach the global
market.
Industry Analysis
Evaluating the level of competition in the industry where Cleanaway Waste management
operates in and uses Porter’s five forces model
The level of competition in Waste management and recycling industry is evaluated for
the company named as Cleanaway waste management by using Porter five forces model (Simon,

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Fischbach and Schoder 2014). This sector market had been analyzed by conducting external
environmental analysis. There is various market forces present in the model such as bargaining
power of customers, bargaining power of suppliers, threats from new entrants, threat from
substitute products and rivalry from existing firms.
Figure: Porter Five Forces Model of Cleanaway Waste Management
(Source: Sakas, Vlachos and Nasiopoulos 2014)
Rivalry from existing competitors
The waste management and recycling industry in Australia faces low threat from
competitors due to various factors or reasons that had been justified as under:
 Waste Collection Industry- On analysis, it is noted that waste management industry in
real has a significant impact where the analysts puts more Weightage to its existence. It is
Cmpetitive
Rivalry
Bargainin
g power
of
customers
Bargainin
g power
of
suppliers
Threat of
new
entrants
Threat of
substitute
products

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
the waste management and recycling industry in Australia that have long-term positive
impact on the current business entity that adds value to it (Nerur, Rasheed and Pandey
2016). Therefore, the qualitative factors will definitely lead to increase in the level of
costs.
 Low Competition- On analysis, it is analyzed that waste management industry faces
minimum level of competition from any of the rival firms who operates in waste
management and recycling industry in Australia (Simon, Fischbach and Schoder 2014).
 High strategic stakes- It is important to note the fact that high strategic stakes has a
significant impact where the analyst put more emphasis on providing strategic decisions
by keeping in mind about the services rendered by Cleanaway Waste Management
Limited.
Threat from new entrants
The waste management and recycling industry in Australia faces low threat from new
entrants due to various factors or reasons that had been justified as under:
 High cost investment- For a new entrant, it is difficult to invest huge money in starting a
waste management and recycling industry. It is not preferred by everyone to enter this
industry due to high cost investment. Therefore, Cleanaway Waste Management Limited
has low threat from any of the new entrants who are willing to invest in the industry
(Simon, Fischbach and Schoder 2014).
 High exit barriers- Any new entrant in the industry (waste management and recycling in
this case) will always think of exit barrier or cost to exit if they want. In this particular
industry, there is a high exit barrier that is not preferable for most of entrants who shows
interest in starting a business in this industry (Jenkins and Williamson 2015). Therefore,

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Cleanaway Waste Management Limited can enjoy their market share as they have low
threat from the new entrants.
 Strict regulations- There are strict regulations and government intervention in this
industry that makes it quite difficult for the new entrants to think of an option to start up
something in the given industry (Aguinis, Edwards and Bradley 2016). Strict regulations
have positive impact for Cleanaway Waste Management Limited as they already are an
established company with its listings in Australian Stock Exchange.
 High Investment- High investment in waste management and recycling is one of the
vital factor that restrict new entrants as they have to spend a lot of money to start or enter
the industry. High investment will be a positive aspect for Cleanaway Waste
Management Limited as they are well-reputed company in Australia (Simon, Fischbach
and Schoder 2014).

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BUSINESS VALUATION AND FINANCIAL ANALYSIS
Threat from substitute products
The waste management and recycling industry in Australia faces low threat from substitute
products due to various factors or reasons that had been justified as under:
 Waste management High exit barriers- It is already discussed in the new entrant’s part
of the study that there is high exist barriers that restrict emergence of other substitute in
the present industry. Therefore, Cleanaway Waste Management Limited has low threat
from substitute products.
 Few to zero substitutes for waste management- There is few substitute present in
waste management and recycling industry that will be managed by the company if they
start implementing new strategies in their operations (Jenkins, Ambrosini and Collier
2016).
Bargaining power of suppliers
The waste management and recycling industry in Australia faces high bargaining power
from suppliers due to various factors or reasons that had been justified as under:
 Paying premium for licenses and rights- It is important to note the fact that waste
management and recycling industry faces high bargaining power from the supplier where
the company belonging to the industry need to pay premium prices for getting access to
licenses and rights. Therefore, Cleanaway Waste Management Limited needs to keep
their cost higher in their company as they have practically no say in front of their
suppliers (Harrison and John 2013).
 Strong big supplier- It is essential to consider the fact that the waste management and
recycling industry had to face strong big supplier to get their services on time. There is