Managerial Accounting for Financial Analysis of Walmart and Loblaw Companies

The aim of the assignment is to conduct the financial analysis of the Walmart Company and Loblaw Company. The application of the management accounting concept and the relevance of the same in the improvement of the profitability of the company. The relevant business factors and the macroeconomic conditions under which the company operates were evaluated.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
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2MANAGERIAL ACCOUNTING
Executive Summary
The aim of the assignment is to conduct the financial analysis of the Walmart
Company and Loblaw Company. The application of the management
accounting concept and the relevance of the same in the improvement of
the profitability of the company. The relevant business factors and the
macroeconomic conditions under which the company operates were
evaluated.

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Table of Contents
Introduction.....................................................................................................4
Discussion........................................................................................................4
Conclusion.......................................................................................................8
Reference........................................................................................................9

4MANAGERIAL ACCOUNTING
Introduction
Management Accounting is the process of evaluating, analyzing and
recording of a financial data so that the management of the company can
use the same for internal management purpose. The process will help them
in evaluating the business conditions and making decisions for the company.
The two companies evaluated for the purpose of the management
accounting is the Walmart Company and Loblaw Company. The evaluation
for the two company was done in order to analyze the profitability of the
company and operational efficiency of the company1.
Discussion
The Walmart Company is the multinational American retail company
which operates a large chain of hypermarkets and grocery stores. The
company primarily operates in the retail sector and generates in revenue
from the sales of its retail outlets. The company has a global operation via its
retail chain and hypermarkets and has its primary market in U.S and is one
of the largest company in the terms of revenue2. The company financial
analysis shows the profitability for the company has been falling and the
same has been due to rising operational cost for the company and the rising
cost of sales for the company which is making the operating margin and the
1 Goetsch, David L., and Stanley B. Davis. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson, 2014.
2 Matanga, Jean Marc Mpanga. "The Main Key Success Factors of the Multinational
Corporations’ Successful International Business in Spite of Their Exposure to Many Forms
and Sources of Risk (The Case of Wall-Mart)." Open Access Library Journal 5.05 (2018): 1.

5MANAGERIAL ACCOUNTING
net margin for the company decreasing. The Profitability ratio analyzed such
as the return on total assets and equity for the company in the five year
trend period has consistently shown a negative trend3.
The Loblaw Company operating as a food retailer company having its
prime operation in the Canadian Market. The Loblaw Company is the largest
food retailer and retail operating company in Canada. The company
generates its revenue from items like groceries, apparels, pharmaceutical
products and others. The financial analysis for the company shows that the
financial position for the company has shown considerable amount of
improvement in the five trend period analyzed. The profitability ratios for the
company including the return on assets and return on equity for the
company has been consistently rising for the company. The rise in operating
income of the company was greater than the rise in the operating expenses
for the company which helped them maintain the sustainability in the net
profit margin4.
The macro economic conditions such as the Global GDD growth rate,
inflation level and the employment rate in the economy plays a significant
role. The business factors such as the operating costs, net profitability and
the level of demand and supply of goods and services are some of the
common factors which may affect both the companies. The key factors
3 Kaplan, Robert S., and Anthony A. Atkinson. Advanced management accounting. PHI
Learning, 2015.
4 Schaltegger, Stefan, and Roger Burritt. Contemporary environmental accounting: issues,
concepts and practice. Routledge, 2017.

6MANAGERIAL ACCOUNTING
analyzed for the companies needs to be forecasted and the same needs to
evaluate so that the same can help the management in making sound
decision policies and strategies accordingly5.
The two key management accounting concepts which can be used for
the improvement of the efficiency in the company and the profitability of the
company is the planning and budgeting step and the performance
measurement evaluation done by the company. The steps can help the
company analyze various situations and develop an efficiency model for the
better prospect of the company6. The above companies analyzed operates in
a cyclical business where the business factor may significantly influence the
operations of the company. The planning and budgeting will help the
companies make various budget plans and the revenue guideline strategy
for the company which will help the company in guiding the amount of units
to be sold at what price so that the margin of the company remains
sustainable. The companies can apply the concept of the capital budgeting
for evaluating the cost involved and the cash flows that will flow to the
company. The performance measurement is the other management
accounting concept that can be applied by the company for evaluating the
performance trend. The same can be done by analyzing the growth of
5 AlKhajeh, Mahdi Hasan Ahmed, and Azam Abdelhakeem Khalid. "Management Accounting
Practices (MAPs) Impact on Small and Medium Enterprise Business Performance within the
Gauteng Province of South Africa." (2018).
6 Maas, Karen, Stefan Schaltegger, and Nathalie Crutzen. "Integrating corporate
sustainability assessment, management accounting, control, and reporting." Journal of
Cleaner Production 136 (2016): 237-248.

7MANAGERIAL ACCOUNTING
profitability for the company and the efficiency ratio of the company. The
efficiency ratio for both the companies was calculated in order to determine
how efficiently the companies are using the assets and the capital deployed
in creating the wealth generation for the stakeholders of the company7. The
performance measurement will also let the company know about the
deviations faced by them from the original planned budgeting and strategy
for the company. In the above case the Walmart Company was observed to
be more cyclical and the profitability ratio for the company was weaker than
the Loblaw Company. The operations of the Walmart Company is primarily
dependent on the global presence of its retail outlet while the operation of
Loblaw’s company is primarily dependent on the Canadian market. There are
different macro-economic factors for both the companies but the business
factors and the management accounting concepts like the budgeting and
planning step and the performance evaluation of the company can be well
applied by both the companies. The application of the management
accounting in the current business scenario will help them emphasize more
on the future growth and sustainability of the company8.
Conclusion
The management accounting concepts are of much importance for the
growing companies in order to review the various aspect of its business
7 Malmi, Teemu. "Managerialist studies in management accounting: 1990–
2014." Management Accounting Research31 (2016): 31-44.
8 Margaret, Woods, and Linsley Philip. "Future research in accounting and risk." The
Routledge Companion to Accounting and Risk. Routledge, 2017. 296-301.

8MANAGERIAL ACCOUNTING
operational area. The analysis for the above two company’s shows that the
application of management accounting is not limited to financial accounting
and can be used to review the various conditions of the companies. The
analysis also reviewed the identification of the problem and studying the
cause and effect relationship for the same. Thus, the companies needs to
emphasize on the future prospect of the company by increasing the
efficiency of the company and profitability for the company.

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Reference
AlKhajeh, Mahdi Hasan Ahmed, and Azam Abdelhakeem Khalid.
"Management Accounting Practices (MAPs) Impact on Small and Medium
Enterprise Business Performance within the Gauteng Province of South
Africa." (2018).
Goetsch, David L., and Stanley B. Davis. Quality management for
organizational excellence. Upper Saddle River, NJ: pearson, 2014.
Kaplan, Robert S., and Anthony A. Atkinson. Advanced management
accounting. PHI Learning, 2015.
Maas, Karen, Stefan Schaltegger, and Nathalie Crutzen. "Integrating
corporate sustainability assessment, management accounting, control, and
reporting." Journal of Cleaner Production 136 (2016): 237-248.
Malmi, Teemu. "Managerialist studies in management accounting: 1990–
2014." Management Accounting Research31 (2016): 31-44.
Margaret, Woods, and Linsley Philip. "Future research in accounting and
risk." The Routledge Companion to Accounting and Risk. Routledge, 2017.
296-301.
Matanga, Jean Marc Mpanga. "The Main Key Success Factors of the
Multinational Corporations’ Successful International Business in Spite of Their
Exposure to Many Forms and Sources of Risk (The Case of Wall-Mart)." Open
Access Library Journal 5.05 (2018): 1.

10MANAGERIAL ACCOUNTING
Schaltegger, Stefan, and Roger Burritt. Contemporary environmental
accounting: issues, concepts and practice. Routledge, 2017.