Wal-mart Food, INC: Management Accounting Concepts

Table of Contents

Introduction
Wal – Mart’s budgeting process
Wal- Mart’s costing process
Capital decisions
Capital acquisition and structure
Conclusion
Reference List

Introduction

This would involve a short picture of Wal-mart food, Inc… It is the earth’s largest vendor it functions, in the course of an enormous foundation of Wal-Mart supplies, supercenters of Wal-Mart, etc. The main purpose of the Final Project is to apply the concepts and techniques of the module to the analysis of real-world situations or problems. The major region of focus in this study is the management accounting of Wal-Mart. The organizations preserve more than 6,900 supplies and workplaces everywhere on the earth, with almost 2,900 of its supplies are situated globally. The company possesses a worldwide brand name in fast food supply channels. In addition to that, the company follows a quite reliable, transparent, and effortless management accounting scheme globally in its processes. “The average Wal-mart customer is 42 to 46 years old, with household income $30,000 to $ 35, OOO and an average purchase of $30. Wal-mart Supercenters, located in 45 states, are larger stores that combine a full-line supermarket with discount department stores” (Plunkett, 2007).

The management accounting system of Wal-mart offers the various data required for efficient judgment making. Administrators of the Wal-mart stores make use of this information to make the most suitable decision. Management accounting system needed for every aspect of the Wal-mart operations so the discussion with regards to this topic is very much necessary.

Wal – Mart’s budgeting process

Wal mart uses management tools like budgeting to establish itself as a team leader. In Wal- mart budgeting process is mainly used for the detection of blockage of funds and for setting up targets against which the company’s performance can be measured and decisions can be made. The review of Wal- mart’s balance sheet shows that the firm has many lenders. The financial information helps in the portrayal of its competitors in Wal – mart. “Wal-Mart emphasized cost-cutting, and since human resource management does not directly generate sales, the function was treated as an unfortunate cost of doing business” (Noe 2006, p.204).

Wal-mart’s marketing department is of big-budget because the company focuses a lot on marketing and the marketing budget is prepared based on the population and other costs of the area in which the company is opening its new store. Wal- mart’s generates for each of its stores weekly and monthly budgeted costs for its labor cost. This budget is prepared according to the sales in each store. The store managers are required to prepare a projected budget report which they send to the head authorities for approval. Regarding the capital budgeting process, the Wal-Mart uses direct foreign investment as a measure to increase its cash flow by applying its business concept to other foreign countries. Wal-mart has a considerably big advertising budget. The research and development budget has also increased in recent years. Using the management accounting concepts Wal-marts improves its sales and its profitability.

Wal- Mart’s costing process

Wal- Mart uses the management accounting concepts to make appropriate decisions and to provide its customer’s products of high quality at reasonable prices. Wal – Mart uses software for the management of data warehouses. Wal- mart has an automated product ordering and replenishment system which helps in the delivery of the right products at the right time and at the right place. The product assortment is done in Wal-mart based on the requirements by customers in all the entity stores of Wal-Mart. The product assortment technique is a management tool adopted by Wal-Mart. Every sale is tracked in Wal-Mart using the sale device point and this helps in the maintenance of adequate stock in Wal –Mart. This helps in maintaining the correct amount of stock at very low prices and is an efficient budgeting tool.

“Wal-Mart’s below invoice prices on a handful of items were also below average variable cost. Under this logic, the fact that below- invoice prices on pharmaceuticals items might increase Wal- Mart’s profits on other items is irrelevant for a predatory pricing inquiry” (Coate & Kleit 1996, p.196).

Wal- mart uses the electronic product code which is a barcoding system and helps to track the items that are in stock and the items that have been sold. This type of management tool helps Wal-mart in increasing its efficiency in product management and costing. Wal-mart saves dollars using this type of coding system which helps in the proper decision making regarding the stock details. “Wal-mart can dictate the cost at which goods should be supplied and enforces its demands by sourcing elsewhere; leaving the supplier unable to plug the gap such an important client leaves behind” (Werther & Chandler 2006, p.33).

The cost price of Wal- Mart items is around 15 % less compared to other groceries and the reason behind this is the efficient management of accounting information. Wal mart costing process is such that it squeezes its labor costs and other production costs. The firm mainly reduces its costing process by the efficient control of its supply chain and also cuts costs by involving in actions that have specific purposes like lessening the earnings in the retail sector. Wal- mart has an efficient inventory costing tool in the form of the electronic product coding system. Wal – Mart has an efficient management accounting system in its stores and its employees are a part of its information dissemination group. In Wal-Mart the electronic commerce system is used to manage its excellent retail sales growth. In Wal- Mart stores were encouraged to directly deal with the suppliers overseas and to implement new strategies which can help them earn profits at a low budget.

Capital decisions

All company decision is linked using in one means or any more by way of the monetary and financial circumstance of the business. The outcome of the capital decision study will aid in the determination of the companies capability to stay in a particular column of the company. “To fully understand the company’s financial position a financial manager must consider the amount of networking capital available. The networking capital is the differences between the current assets and current liabilities” (Capital structure Walmart, 2010).

Capital Decision constructs a particular type of software and offers a wide variety of resolutions in the Capital Marketplace freedom. The company offers various modified packages of the manufacturing goods resolving for every organization reporting requirement, preserved and ad-hoc comprises risk information. Capital Decision is also extremely Capital decisions are extremely significant to the monetary achievement of an organization. Wal-mart is the worldwide brand name in fast food supply channels and also the proper management accounting is very much vital for increasing the profitability as well to increase the sales volume of the company.

Capital acquisition and structure

So it is necessary to understand the capital acquisition and structure of the capital decision. And also the management toll of the Wal-mart like supply and value chain to regulate necessities and measures and keep the costs of business low down. In Wal – Mart management system is used in all decision-making regarding the banking sector, the choice of wholesalers and retailers, and the pricing process and marketing. The use of a management accounting system in Wal-mart helps in most well-organized amass administration schemes by using electronic commerce to decrease the manufacture and the relief costs is a highly significant management accounting tool. Capital acquisition resources help to address the various subjects’ matters. “The term capital structure refers to the percentage of capital (money) at work in a business by type. Broadly speaking, there are two forms of capital: equity capital and debt capital. Each has its benefits and drawbacks and a substantial part of wise corporate stewardship and management is attempting to find the perfect capital structure in terms of risk/reward payoff for shareholders” (Kennon 2010). The financing choices of any organization normally consist of the quantity of debt and equity ratio. In addition, this the competitive essentials in the marketplace, changing consumers requirements and food flavors, legislative interferences, and the all general financial atmosphere also affect the overall functioning of the Wal-mart. So all these factors also affect the assets structuring, exercise of debt assets, and the requirement to enlarge resources and earnings of the organization in the course of equitable way.

Conclusion

Wal –Mart uses an efficient management accounting system in its costing, budgeting, and capital decision-making process and devises new strategies and techniques to be the retail leader in the US. The adoption of information technology further improved the management accounting system of Wal-Mart. The use of a management accounting system in Wal-mart helps in efficient store management system by using electronic commerce to reduce the production and the delivery costs are highly important management accounting tool.