FNSACC501: Financial and Business Performance Report - Kogan Ltd

This document presents a comprehensive analysis of financial and business performance, focusing on Kogan Ltd. It includes an assessment of tax liabilities, wealth accumulation strategies, asset development, and legal and financial requirements. The report also covers insurance needs, tax issues, and implementation strategies for business objectives. Furthermore, it emphasizes the importance of continuous financial review, the accuracy of financial data, and provides vertical and horizontal analysis of Kogan Ltd's income statement. The analysis extends to cash flow statements, profitability, and corporate governance principles. The document also addresses risk management, investment options, different types of taxes, allowable deductions, and financial forecasting techniques. It concludes with a discussion on legal rights, financial information formats, significant acts, important reports, and the role of financial markets and treasury.

Running head: DIPLOMA OF ACCOUNTING
Diploma of Accounting
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Assessment 1...................................................................................................................................4
Part 1................................................................................................................................................4
Insurance Needs...............................................................................................................................7
Implementation Strategies...............................................................................................................7
Part 2................................................................................................................................................8
Importance of Continuous Review of Financial Position................................................................8
Completeness of the Annual Report of Kogan ltd...........................................................................8
Changes in Financial Position.........................................................................................................8
Assessment 2...................................................................................................................................9
Accuracy of the Financial Data.......................................................................................................9
Vertical and Horizontal Analysis of Income Statement of Kogan Ltd..........................................10
Profit and Loss Statement and Debt Equity Ratio.........................................................................11
Problems Faced by Kogan Ltd......................................................................................................12
Analysis of Cash flow Statement...................................................................................................12
Analysis of Performance of the Business......................................................................................12
Increase in Profits..........................................................................................................................13
Funds Requirement........................................................................................................................13
Assignment 3.................................................................................................................................14
Corporate Governance Principles..................................................................................................16

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Risk faced by the Company...........................................................................................................17
Risk Management Strategies.........................................................................................................18
Investment Options........................................................................................................................18
Assessment 4.................................................................................................................................19
Different Types of Taxes...............................................................................................................19
Deductions allowable to a business...............................................................................................20
Rules for Claiming an Expenses as Deduction..............................................................................21
Deduction for Travel Expenses.....................................................................................................21
Simplified Depreciation Rules.......................................................................................................21
Tax Implications of Prepaid expenses...........................................................................................22
Time limit for Amending Tax Assessment....................................................................................23
Capital Gain Tax Concessions.......................................................................................................23
PAYG Installments........................................................................................................................23
GST Concessions...........................................................................................................................24
Areas Causing issues in Taxation..................................................................................................24
Financial Forecasting Techniques.................................................................................................24
Financial Risks...............................................................................................................................24
Managing Risks.............................................................................................................................25
Legal Rights of a Client.................................................................................................................25
Formats Used for Depicting Financial Information.......................................................................26

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Significant Acts.............................................................................................................................26
Important Reports..........................................................................................................................26
Cash Flow Statement Analysis......................................................................................................27
Budgeting in Business...................................................................................................................27
Financial Markets..........................................................................................................................28
Treasury’s Role..............................................................................................................................28
Reference.......................................................................................................................................29

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Assessment 1
Part 1
Tax Liabilities reduction goals
The information which is presented in this assessment is obtained by a process of
interview which is conducted with the board of directors of the business. The board of directors
of the company are responsible for formulation of policies and different strategies of the business
and therefore they are the best persons to get information about the working of the company.
The tax liabilities of the company as shown in the annual report for the year 2017 is
shown to be $ 2,384,500 which is shown in the financial statements. The tax liability of Kogan
Ltd has increased considerably when the tax liability of the business is considered for the
previous year. The tax liability of the company is shown to be $ 622,072 as per the financial
statements of 2016. The tax expenses which is shown in the income statements of the company is
comprised of both current tax expenses and deferred tax expenses of the business. The tax
reduction policies of the business involve effective optimization of taxes as per the policy of the
management1. The management of the company has already employed competent accountants
and tax advisor so as to ensure that all the provisions and legal requirement are followed when
the business is assessing the tax which the business needs to bear at the end of the financial year.
The GST components of the business which are concerned with operating and investing
activities which are either to be paid or received from the ATO is shown in the operating cash
1Kogancorporate.com. (2018). [online] Available at:
https://www.kogancorporate.com/document/73c43b2fa1cd4706851051ddaaced964/
KOG0004%20AR17_PFO_web.pdf [Accessed 29 Jun. 2018].

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flows of the business. The management of the company will also be availing the various
deductions which are available to the company if certain conditions are met.
Wealth Accumulation
As per the annual report of Kogan ltd, the management of the company focuses on
building up effective customer relationship and also improve the quality of the product which is
provided by the company. In addition to this, the management is committed towards generation
of wealth as per the annual report of the business. The most important role in the accumulation of
wealth for the business is that of the management who are involved in the planning process of
the business2. The wealth accumulation of the business can be clearly identified from the annual
report of the business which shows the asset such as property plants and equipment which are
under construction as shown in the notes to account section of the annual report3. As per the
annual report of the company for the year 2017, the annual report specifies that the effective
performance of the business during the year. Kogan company is engaged in a variety of business
and therefore has an effective portfolio of the services which is provided by the company
(Kogancorporate.com. 2018).
Asset Development
The assets which the company possess in the annual report of the business as per the year
2017. The assets of the business are shown in the profit and loss statements as prepared by the
business. The business has purchased assets during the year as shown in the notes to accounts of
the company. The business also had purchased assets from Dick Smith in the year 2017. The
2 McKernan, Signe-Mary, Caroline Ratcliffe, C. Eugene Steuerle, and Sisi Zhang. Less than equal: Racial
disparities in wealth accumulation. Washington, DC: Urban Institute, 2013.
3 Hills, John. Wealth in the UK: distribution, accumulation, and policy. Oxford University Press, 2013.

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business has shown significant amount of profit as shown in the annual report of the company for
the year 2017 which has increased tremendously in comparison to previous year’s estimate
which shows that the management of the business is focused towards generation of wealth for
the shareholders of the company.
Legal and Financial Requirements
The legal requirement of the business focuses on the compliance of all the legal
regulation which is applicable to the company as introduced by the government. In addition to
this, the annual reports of the business show that during the ordinary course of business, the
company has faced law suits which are other than for tax rules compliance. The code of conduct
of the business and management policies of the business are all governed by the legal
requirement of the business.
The financial regulations of the business are as per the standards of accounting which are
established by AASB which are applicable on the business. The other common accounting
policies and conventions which are followed by other businesses belonging to the same industry
is also applicable to the company.
Personal Investment Strategies
As per the cash flow statement which is prepared for Kogan ltd, the business has made
investment in intangibles. In addition to this, the management of the company is expecting
investments in the business. The strategies of the business is to maximize the investments of the
business. The management expects to increase the investments of the company in the coming
year 2018.

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Business Registration
In order to operate in the market, the business needs to register with the authorities. The
registration of the business needs to be handled by the legal team of the business and the
business also needs to comply with all rules and regulations of the corporation act.
Insurance Needs
The business is engaged in a variety of business, therefore the need for insurance for the
overall business is important. The insurance needs of the business are quite evident as the
business has various diversified business and certain retail and other service units might be
subjected to risks for which the business needs insurance cover.
Tax Issues and Requirements
In order to achieve the long-term goals and business objectives of the business, the
management of Kogan ltd need to comply with the legal requirements of tax. Due to the
diversified business of the company, various taxes are applicable on the company which the
business needs to consider in order to proceed with the business and overall operation of the
company.
Implementation Strategies
Strategies will be adopted by the business in order to ensure that all other strategies of the
business are effectively implemented which will be formulated by the top-level management.
The management has already as per the annual report of 2017 established different committee
which will be looking after different roles of the business. In addition to this, the management

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can implement performance report on a monthly basis so as to review the performance of the
business as per the goals and objectives of the business.
Part 2
Importance of Continuous Review of Financial Position
In order to ensure that the financial position of the business is stable and the policies
which are formulated by the business are appropriate, continuous review of the financial position
is needed4. The market and the business environment are dynamic in nature and changes
continuously therefore it is essential that the financial position of the business is review
regularly.
Completeness of the Annual Report of Kogan ltd
The annual report of the company shows the business model of the company which is to
ensure that the best quality of online services is available to the customers. The management of
Kogan ensures that the business uses the best technologies and online technologies for retail
services. The business model of the company focuses on cutting out the benefits of the middle
men and ensure that the clients get the best deals for the products.
Changes in Financial Position
The financial position of the business is shown in the annual report of the company which
is engaged in retail business. The management of the company has brought about changes in the
technological aspect of the business and thereby also improved the operational structure of the
4 Yang, S. Alex, and John R. Birge. "How inventory is (should be) financed: Trade credit in supply chains with
demand uncertainty and costs of financial distress." (2013).

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business. The profits of the business have significantly increased from the results of 2016. The
profit which is earned during the year is shown to be $ 3,739,865. The business should plan
aggressive strategies to further increase the revenues of the business5.
Assessment 2
Accuracy of the Financial Data
The accuracy of the financial information by consulting with the auditors of the business
and also by reviewing the auditor report which is provided in annual report of the business
during the year 2017. The auditors of the company are KPMG and the auditor report shows that
the financial statements are prepared according to corporation act 2001 and is also showing true
and fair view. The accuracy of the financial information can be confirmed by reviewing the
treatments of the various items which are shown in the annual report of the business and ensure
that the same comply with the relevant standards to which the treatments are associated with.
5 Gitman, Lawrence J., Roger Juchau, and Jack Flanagan. Principles of managerial finance. Pearson Higher
Education AU, 2015.

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Vertical and Horizontal Analysis of Income Statement of Kogan Ltd
Particulars 2017 2016 Amount Percentage
$ $
Revenue 289,517,780.00$ 211,158,595.00$ 78,359,185.0000 0.3711
Cost of sales -237,824,300.00$ -178,462,191.00$ -59,362,109.0000 0.3326
Gross Profit 51,693,480.00$ 32,696,404.00$ 18,997,076.0000 0.5810
Selling and Distribution Expenses -15,275,422.00$ -10,182,023.00$ -5093399.000 0.500
Warehouse Expenses -5,810,443.00$ -4,672,696.00$ -1137747.000 0.243
Administration Expenses -23,108,076.00$ -15,798,804.00$ -7309272.000 0.463
Other expenses -993,060.00$ -406,279.00$ -586781.000 1.444
Profit before net financing income and income tax 6,506,479.00$ 1,636,602.00$ 4869877.000 2.976
Finance Income 469,845.00$ 6,207.00$ 463638.000 74.696
Finance Costs -124,694.00$ -211,588.00$ 86894.000 -0.411
Unrealised Foreign Exchange (loss) -727,265.00$ -$ -727265.000 0.000
Profit before income tax 6,124,365.00$ 1,431,221.00$ 4693144.000 3.279
Income tax (expense)/benefit -2,384,500.00$ -622,072.00$ -1762428.000 2.833
Profit for the year 3,739,865.00$ 809,149.00$ 2930716.000 3.622
Statement Showing Income and Expenses (Common Size Statement)

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Particulars 2017 Percentage 2016 Percentage
$ $
Revenue 289,517,780.00$ 100.00% 211,158,595.00$ 100.00%
Cost of sales -237,824,300.00$ 82.14% -178,462,191.00$ 84.52%
Gross Profit 51,693,480.00$ 17.86% 32,696,404.00$ 15.48%
Selling and Distribution Expenses -15,275,422.00$ -29.55% -10,182,023.00$ -4.82%
Warehouse Expenses -5,810,443.00$ 2.01% -4,672,696.00$ 2.21%
Administration Expenses -23,108,076.00$ 7.98% -15,798,804.00$ 7.48%
Other expenses -993,060.00$ 0.34% -406,279.00$ 0.19%
Profit before net financing income and income tax 6,506,479.00$ 2.25% 1,636,602.00$ 0.78%
Finance Income 469,845.00$ 0.16% 6,207.00$ 0.00%
Finance Costs -124,694.00$ 0.04% -211,588.00$ 0.10%
Unrealised Foreign Exchange (loss) -727,265.00$ -$
Profit before income tax 6,124,365.00$ 2.12% 1,431,221.00$ 0.68%
Income tax (expense)/benefit -2,384,500.00$ -0.82% -622,072.00$ 0.29%
Profit for the year 3,739,865.00$ 1.29% 809,149.00$ 0.38%
Statement Showing Income and Expenses (Comparative Statement)
Profit and Loss Statement and Debt Equity Ratio
As per the profit and loss statement which is shown in the annual report of the company
for the year 2017 shows that the profitability of the business has significantly improved from the
performance of previous year. The profit of the business has increased from $ 809,149 in 2016 to
about $ $ 3,739,865 in 2017. This shows tremendous performance of the business and also
depicts operational efficiency of the business6. The computation of debt equity ratio of the
business is shown below:
The debt equity ratio shows that the proportion of debt in the capital structure mix is
much more than the equity mix in the capital structure of the business. The business as per the
annual report of the company for the year 2017 shows that the business does not utilizes any
6 Heikal, Mohd, Muammar Khaddafi, and Ainatul Ummah. "Influence analysis of return on assets (ROA), return on
equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current ratio (CR), against corporate profit
growth in automotive in Indonesia Stock Exchange." International Journal of Academic Research in Business and
Social Sciences 4, no. 12 (2014): 101.