Management Accounting Planning Tools and Financial Problems

This report provides a comprehensive overview of management accounting (MA) and its crucial role in business operations. It delves into various planning tools utilized for budgetary control and organizational stability, including operational, capital, and zero-based budgeting. The report examines how businesses can leverage MA techniques to identify and respond to financial problems, such as benchmarking, key performance indicators (KPIs), and variance analysis. Through a comparative analysis of Sainsbury and Samsung Plc, the report illustrates the practical application of these MA tools in resolving financial issues. The conclusion emphasizes the significance of MA for effective business management and the benefits of implementing appropriate planning tools to achieve financial goals. The report also provides a list of references to support the information provided.

Effective Planning Tools
for Managing Accounts-
A2

TABLE OF CONTENTS
 Introduction
 Various types of planning tools used in MA
 Ways in which businesses can use MA to respond to its financial problems
 Comparing the two organisations using MA techniques for resolving their financial
issues
 Conclusion
 References

INTRODUCTION
 Management accounting is used for effectively managing the
business functioning by providing assistance to the internal
management team in taking informed decisions.
 In this presentation, the different types of planning tools which
can be used by the organization for implementing budgetary
control and to ensure stability.
 It also covers the ways through which organizations can
effectively deal with the financial problems of the organization.

Various types of planning tools used in MA
 The budget is being prepared by the businesses which provides an estimated amount of
revenue and expenditure for a particular period with the core objective of achieving the
desired objectives.
 The budget is utilized in the planning process of the organization.
 It is further used for comparing the actual result with the set budgets so that timely
remedial actions can be taken to reduce it.
 The different types of tools which is being used by the organization for implementing
control are given below.

Cont..
Operational budget
 This financial plan is identified with the operational exercises of the business. It gives
an expected measure of sales and costs.
 This financial plan gives a help to the organization for proper allocation of the assets
and other resources inside the organization.
 For instance, if the operational spending plan is made it will give help to the
administration in meeting up the operational prerequisite of the business so as to
maintain the business adequately.

Cont..
Capital budget
 The capital financial plan is readied thinking about all the capital
expenditure of the business which includes tremendous measure of
money inflow and outflow.
 It demonstrates the sum accessible with the organization for making the
investment. Its sets the breaking point within which the capital
consumption can be done by the business entity.
 For example, a budget plan is being prepared which incorporates the
assessed sum concerning the different investment plans available to the
business.

Cont..
Zero based budget
 This is another type of planning tool, wherein the budget plan is
made from zero level, that is, from scratch.
 It doesn't consider earlier year spending plan. A total examination is
completed in regard to every single thing to be included in the
financial plan alongside with appropriate support and justification.
 This is considered as the most suitable strategy for planning as the
budget plan prepared is least deviates off from the actuals which
results into taking speedy and right choices.

Ways in which businesses can use MA to respond to its
financial problems
Identifying Financial problems
 Organizations today faces various financial issues while determining the correct plan of
action and systems for reacting to the different budgetary issues having impact over the
investors of the organization and on the growth of the company.
 The business entities are required to distinguish the major budgetary issues with the
assistance of the different techniques so right and proper actions can be taken to
evacuate these issues.

Cont..
Benchmarking
 It implies executing strategies that are valuable in distinguishing the issues which are
being looked by the association.
 This compares and contrasts the presentation of the organization with its rivals.
 It investigates the procedure and the strategies which are being utilized by the rivals
which is best in industry which can be executed by the business association in
improving it performance level and profitability.

Cont..
Key Performance Indicator
 This performance indicator measures the value in regards to the viability of
the organization in achieving its ideal objectives within the limited time
frame or period.
 KPI's are used by the business organizations at the different hierarchical
level to assess the accomplishment for reaching at the desired goals.
 This technique is used for effectively and efficiently observing and breaking
down the productivity of the business by estimating the set targets
accomplished or not, so that significant changes can be made in the
technique and the targets set in order to meet the financial requirements of
the business along with moderating the issues.

Cont..
Variance analysis
 This tool helps in determining the deviation of the actual outcome of the business in
regard to the set standards which are set by the management.
 This provides assistance to the business in identifying the deviation the result so that
steps can be taken in identifying the causes of the deviation so that in future plans are
made in such a way after considering the causes which will result into less deviation
and more favourable result.
 This a very effective tool for identifying and analysing the financial problems that the
business faces so that effective actions can be taken to mitigate it.

Cont..
 The above stated techniques are the ways which can be utilized by the business
organization for the purpose of identifying the major financial problems.
 Some of the common but the most influential financial problems that the business
organization comes across is in terms of performance and productivity in regards to the
business operational activities on the below outcomes.
 In the situation where the performance level of the organization is lower than the
benchmark set by the respective department.
 The KPIs which has been set by the organization is not achieved.
 In case, when there is huge deviation between the actual and the standard figures.