Oroton Essay example

6679 WordsMay 4, 201327 Pages
Section E: Accounting Analysis Key accounting policies The key success factors for a company which operates in consumer discretionary sectors, such as OrotonGroup, are product differentiation through brand, product quality, and product innovation. Therefore, the important accounting policies for achieving those factors are: Accounting Policies | OrotonGroup Policies | Revenue recognition | OrotonGroup recognises revenue when a group entity sells a product to the customers. Revenue from license fees, franchise fees, and commissions are recognised and accrued in the period in which the fees are earned. | Inventories | Finished goods are stated at the lower of cost and net realisable value determined on the basis of moving…show more content…
Quality of disclosures | | Informativeness | * OrotonGroup’s has moderate level of informativeness compared to Pacific Brands Group (PBG). In Oroton’s Chairman and CEO statement, they disclose the management commentary on the current performance and provide strategy for improvement. They also stated their business strategic analysis. In the notes, they justify the key accounting analysis, financial instruments, critical accounting judgements, estimations and assumptions and so forth. Furthermore, they also disclose several key ratios and critical shareholders information which indicates transparency to investors. * However, OrotonGroup’s financial statement is too aggregated compared to PBG since there is no segregation in each of Oroton’s business segment. PBG gives more information regarding its division of their products and its corporate and social responsibility (CSR) while Oroton does not. | User Friendliness | * The Financial statement is presented in clear and concise format with tables, colors, and headings to draw financial report users to key points which Oroton’s accountants try to illustrate. Hence both Oroton and PBG have the similar level of user friendliness. | Potential red flags 1. Adjustment of non-cancellable operating lease 30 June ($'000) | 2011 | 2010 | | | | Within 1 Year | 15057.06 | 12649.79 | Over 1 Year | 31658.91 | 35471.83 | | | | 46715.97 |

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