Report on Earning Management of Kogan Ltd

Running Head: EARNING MANAGEMENT OF KOGAN LTD
EARNING MANAGEMENT OF KOGAN LTD
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EARNING MANAGEMENT OF KOGAN LTD1
Executive Summary
The main purpose of this report is to understand the earning management technique
implemented by Kogan Ltd. The study is supported by analysing the income statement of the
company. It has been found that the company uses various techniques like big bath
techniques, “big bet on the future” technique and Change GAAP technique for earning
management.

EARNING MANAGEMENT OF KOGAN LTD2
Table of Contents
Introduction................................................................................................................................3
Discussions.................................................................................................................................3
Earning Management.............................................................................................................3
Income Statement...................................................................................................................3
Revenue..................................................................................................................................4
Net Profit................................................................................................................................6
Possible Motivations for earning management......................................................................7
SWOT Analysis.....................................................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

EARNING MANAGEMENT OF KOGAN LTD3
Introduction
Earning management techniques is implemented by many organisations to show
smooth earnings in the company's financial statement. The first part of this study has
discussed on the earning management technique used by the management of Kogan Ltd in the
income statement. The last part has given an overview of the SWOT analysis of Kogan Ltd.
The intense of this study is to understand the earning management technique implemented by
Kogan Ltd.
Discussions
Earning Management
Earning management is a method of using different financial techniques for creating a
positive overview of the financial statement of a company. This is done by manipulating the
financial figures recorded in the financial statement and presenting the profits as an overview
of smooth earnings in the business. Earning management is done by applying the accounting
rules and policies and generates higher earnings.
Overview of the Company
Kogan is a leading customer brand of Australia that provides retail services to the
customers. It is a retail and services type of industry that is headquartered in Melbourne,
Australia. The company has aimed to build a business portfolio that creates greater value,
services and offerings to the customers. It is a public sector company that is traded in the
Australian Stock Exchange.
Income Statement
 The depreciation and amortisation expense in FY 2017 was $3,823,701 and decreased
to $5,339,333 in FY 2018. The company has normally written off the cost of this non-