Finance for Managers

: Sainsbury's Supermarket Ltd, UK

Table of Contents Introduction 3 Part 1: the sources of long term finance of Sainsbury's Supermarket Ltd, UK 4 Part 2: The Role of the Management Accountant of Sainsbury's Supermarket Ltd, UK 9 Part 3: Analytical Technique used by Sainsbury's Supermarket Ltd, UK 14 Performance Management Framework at Sainsbury's Supermarket Ltd 16 Formal Feedback Process at Sainsbury's Supermarket Ltd 17 Informal Feedback Process at Sainsbury's Supermarket Ltd 17 Steps Sainsbury's Supermarket Ltd takes to protect itself from Litigations 18 Conclusion 18 References 20

Introduction The purpose of this paper is to assess the source language and use financial information and assess the role of accountants in different organisations. This paper is mainly focused on a selected organisation, namely the Sainsbury Supermarket Co., Ltd., UK. The method of valuation and costing is used by the company approaches designed for its planning and control, financial management and performance management and evaluation. Management accounting information collection is usually broken down the performance of different companies can be measured separately, in order to ensure that they are working to the best of their abilities. Enterprise sells a variety of products; the financial meltdown should be generated for each of them.

This will allow us to ensure that the very profitable product does not have to subsidize those who do not sell. Obviously, different companies have different management accounting needs, this region will depend on the business found that they are the most important. Management accounting information collected is likely to be broken down, a separate part of the business so that productivity can be monitored. This research study sets out to clear the basic concepts of financial management, assessment of finance of the company with the basic sets of accounts prepared while moving up to the end of financial year. The financial manager plays a dynamic role in Sainsbury Supermarket development. This paper is divided in to three parts to investigate the main financial and accounting management issues at Sainsbury's Supermarket Ltd. The part one discusses the sources of long term finance of Sainsbury's Supermarket Ltd, UK; this includes analysing the profit and loss in the fiscal years, to judge the long term competitor's market share. It also includes evaluate the long term government bodies and taxation, planning long term strategies and assess growth and market competences. The second part investigates the role of the Management Accountant of Sainsbury's Supermarket Ltd, UK. This includes an evaluation including a comprehensive official explanation by the financial manager and compare and contrast this description of both textbooks the Management Accountant also analyze how it also describes the source information organisations to use financial information effectively. At the end of financial year the Sainsbury's also make its final account (Holly and Duchaine, 2011). Sainsbury's at the end of financial year prepares its financial account to be aware of its financial position. Like to be aware of the assets in hands of the company and the liabilities company needs to pay. The final account consists of two major accounts - profit and loss account and second is balance sheet. The third and the final part elaborate the analytical Technique used by Sainsbury's Supermarket Ltd, UK. This part includes the to assist in strategic planning and control, performance management and appraisal, decision-making process, and the techniques audit including a discussion of a suitable substitute. , UK J Sainsbury plc is one of the United Kingdom leading food retailers with major concentration in financial services, which consists of Sainsbury's Supermarkets, Sainsbury's Local, Bells Stores, Jacksons stores and JB Beaumont, Sainsbury's online and Sainsbury's Bank with 153, 000 employees across the world. The company supplies over 20 million customers in every week and at the ending months of the 2012; it had almost 1000 stores across the United Kingdom. Sainsbury's Supermarket offers a large number around 40,000 products and the company owns 60% of own brand. The J Sainsbury's was established in 1869 by John James and his wife Mary Ann Sainsbury. The
Part 1: the sources of long term finance of Sainsbury's Supermarket Ltd

started from a small business of dairy shop at 173 Drury Lane, London and the place where the shop was first opened was one of London's poorest areas. The shop managed to attract a lot of customers and became popular for offering high-quality products at low prices over the short period of time. In 1882, after 13 years of interval, John James Sainsbury owned four shops. He had so success in his business and he kept on expanding his business improving its product qualities and facilities.Sainsbury is solely owned by its founding family, within a century, and has reached the size and status to ensure public position in the early 1970s. The public flotation of the company 45 times over-subscription of the shares on the Stock Exchange in 1973, the largest ever floatation (Geoffrey and Andrew, 2011). Over the last century, the company might have direct or indirect influence of external factors and the impacts might have contributed towards the current or present shape that exists today. The purpose of the financial statement is to provide information pertaining to an organisations financial performance, strength and its changes in financial position that is make useful to many users when making economic decisions. The statement needs to be relevant, understandable to all, contain reliable information and comparable. The organisations liabilities, equity, reported assets, income and expenses are reported in a financial statement. Potential investors, banking institutions, government agencies and employee/employers are the audiences or target users of financial statements (Lars, Gulbrandsen, 2010). Financial Statements are formal records of an organisations financial activity. It is a part of the process of financial reporting. The financial statement provides an overview of a business's financial position in short and long-term analysis. There are four basic types of financial statements: Balance Sheet: It is a statement of financial condition and reports on a company's financial assets, legal responsibility and net equity at a given point in time. Income Statement: a company's profit and loss statement that the company's operating results have been reported for a specific period of time. Statement of retained earnings: an overview of the reporting period the company's retained earnings change. Statement of cash flows: Company's cash flow reports and cash flow activities, particularly operating, investing and financing activities. In the past year 2012, the Sainsbury's Supermarket have achieved the savings in operating costs over 100 million pounds. Taking nearly $ 6 million pounds cost save over the five years (reviews.money.co.uk). This is due to the increase
company was

in productivity, procurement savings and simplifies ongoing in-store processes. For example, Sainsbury's Supermarket will continue in logistics in the efficient use of the vehicle, the load and fuel efficiency, improved route optimization. In addition, Sainsbury's Supermarket have recently launched new warehouse technology, Sainsbury's Supermarket workers, staff and organisational personnel work more effective help to improve product availability and reduce waste. The performance of the firm in long term is analysed with the help of Gearing ratio, a comparison of total debt on the company from external sources with the capital available from shareholders with in the company. Thjis ratio needs to be low that shows that the firm is finanaced more by equity, otherwise more finiancing by debt resulted in high gearing ratios. In UK, gearing ratios less than 50% are more acceptable as the companies show more solvency with low gearing ratios. The gearing ratio of Sainsbury plc. in the year 2011 and 2012 were 55% and 49.03% respectively. Following calculations represent these gearing levels: Gearing level in 2011 = long term debt shareholders capital x 100 = 1814 5424 x 100 = 33.44% Gross Gearing level in 2012 = long term debt shareholders capital x 100 = 1980 5629 x 100 = 35.17% The above figures concluded that the gearing ratio of Sainsbury has been slightly increased from 33.44% to 35.17 in a peiod of one year from 2011 to 2012. This level has shown that the dependence on external debyt is increased but the solvency of the firm is well under acceptable lo=imit or under 50% statndard in UK. This final account of Sainsbury's Supermarket gives the image of the company to the stake owners of the company about, how the company is going on in its financial terms. This is the major account and is very important to be considerable for lending money to Sainsbury's Supermarket, or while purchasing shares, giving goods on credit, etc. A measure of both a company's efficiency and its short-term financial health, the working capital ratio is calculated as to assess these two elements; balance sheet is prepared along with profit and loss account. In balance sheet to give the accurate statements, assets are always equal to liabilities of the
company.

, UK continue to manage the cost of inflation pressure strict control to achieve a savings of over one million U.S. dollars GBP in the year of 2012 (reviews.money.co.uk). Sainsbury's Supermarket Ltd, UK basic increase in operating profit is 6.9% to 789 million (2010/11: 738 million), and in operating margin improved by 4 basis points and , in constant prices of fuel its
The Sainsbury's Supermarket Ltd

10 basis points. Related Pre-tax profit increased 7.1% to 712 million pounds (2010/11: 665 million). The Sainsbury's Supermarket Ltd, UK continue to take profit from the cash generated from its operation, an increase of 13.4% over the previous year part to promote an overall improvement in working capital. This cash continues to invest in long-term returns, and enhance economic growth opportunities. During the year of 2012, the core capital expenditures amounted to raised 12.4 million (2010/11: 1.138 billion). The Sainsbury's Supermarket Ltd, UK is pleased that the investment in the past few years is stronger and continues to provide more than the company expected its minimum rate of return (reviews.money.co.uk). In the year of 2009, Sainsbury's Supermarket Ltd, UK decided to accelerate its investment new space to take advantage of relatively cheap land prices at that time and higher availability. Sainsbury's Supermarket Ltd, have since its inception strong pipeline of properties for the future has in store for sales where Sainsbury's Supermarket Ltd, UK can bring high returns, including growth in the region at Sainsbury's Supermarket Ltd, UK are based on the market. Sainsbury's Supermarket Ltd, investment has been increased in recent years, the space to help Sainsbury sales and property value growth, but the new space, with an initial dilutive effect due to opening of the costs and profits of the sales curve. Delivery of the commitment to accelerate growth in space now, Sainsbury's Supermarket Ltd, UK will return to space growth rate of about 5% Years. This will reduce Sainsbury capital expenditure and improve its cash flow from these new sales, Sainsbury's Supermarket overall return stores mature. Sainsbury's designed to manage the diversification of its financing, funds source to minimize refinancing risk and maintain adequate mobility. Sainsbury's to develop the debt financing of 2.7 Billion and undrawn committed credit lines of $ 070 million at its disposal.In the case of Sainsbury's core capital, it consists of two long-term loans of 1.036 billion due in 2018 and 843 million due to in 2031, the assets of the mortgaged property. In addition, the Sainsbury unsecured loan of 499 million pounds in 2012 and 2017, public offering of convertible bonds 748,000 pounds, 190 million, is due in July 2014, finance leases of 143 million (reviews.money.co.uk). The Sainsbury's group maintained a sterling $ 69 billion syndicated revolving credit. The purpose of the standby liquidity facilities will expire in October 2015. The importance of preference of debt capital or borrowed money is the value of interest cover ratio of the firm. For Sainsbury, the available profit before tax and interest has been increased sufficiently in last five years that has increased the interest conb=ver for the boirrowing from erxternal sources. Interest cover payable for year 2011 and 2012 is
calculated below: Interest cover for

2011 = profit before interest and tax Interest expense = 738 97 = 7.9 times

2012 = profit before interest and tax Interest expense= 789 109 = 7.5times Hence, Sainsbury plc favoured debt capital as compared to equity capital due to high tax benefits as the UK government is always deducted tax from the payable interest for the due loan on the company and in result decreased the tax commitment of Sainsbury. To consider the Sainsbury core capital expenditure, it is estimated at 1, 02 million to 1,240 (2010/11: 11.38 billion), due to Sainsbury's expansion and convenient opening program, 28 expansions (2010/11: 24 extensions) and 73 new convenience stores (2010/11: 47 new convenience stores). Core capital spending as a percentage of sales (including fuel, excluding VAT) was estimated at 5.6% (2010/11: 5.4%). Sainsbury's advantage, to continue to maintain a good property yields at mature stores to increase sales and leaseback activities no further real estate development potential to produce proceeds of 303 million (2010/11: 275 million), disposal of property total profit contribution of 8300 million (2010/11: 108 million). Net capital expenditure of 962 million (2010/11: 880 million).
Interest cover for

Part 2: The Role of the Management Accountant of Sainsbury's Supermarket Ltd, UK Management accounting is used to help manage the records, planning and control of business activities, and to assist in the decision-making process. Any period of time (for example, many of the retailer's sales, profits, and inventory levels) to prepare the day-to-day management of information, they can prepare. There is no legal requirement the preparation of management accounts, although very few (if any) of well-run enterprises can survive. There is no pre-determined format management account. I hope they can be detailed or brief management. Management account can focus on the specific areas of business activities. Management accounting is apply to help manage the records, planning and control of business activities, and to assist in the decision-making process. Any period of time (for example, many of the retailer's sales, profits, and inventory levels) to prepare the day-to-day management of information, they can prepare. There is no legal requirement the preparation of management accounts, although very few (if any) of well-run enterprises can survive. There are no pre-determined format management accounts. I hope they can be detailed or brief management. Management account can focus on the specific areas of business activities. On the other hand, concentration in the financial accounting business as a whole, rather than analyze the business part. For example, sales summary figures for total sales, rather than selling a product, released a detailed analysis, market and financial accounting information is a monetary nature. The financial accounts presented a historical perspective on the financial performance of the business. In the world

of retailing, many stores managers and owners are overly concerned about the overall image and marketing strategies of their stores and underestimating the demographic, socioeconomic and site specific factors of the store. While some store managers and owners do consider location factors when searching for a site for their store, most of them don't go into enough depth in their search and it is very common that store managers and owners select the site simply because it is available, and not because it is the best suitable site for the task. Having a good understanding of demographic, socioeconomic and site specific factors may help store managers gain the competitive edge over their competitions. Financial statements are used to submit annual reports to stockholders of an organisation after a financial analysis is performed on the statement to give a more detailed understanding. Investors use financial statements, that are usually prepared by professional financial analysts, to help them make a decision to invest in a company or not. Banks and lending institutions use financial statements to make decisions about providing a company with fresh capital, extending a debt or to finance an expansion venture or other capital pertaining to a company's growth plans. Government agencies use financial statements to analyze the propriety and correctness of taxes or duties declared and paid by an organisation. An employee of a company use financial statements to get information about the stability and profitability of their employer. The financial statement also gives an employee insight into how a company will provide retirement benefits and employment opportunities that allows an employee to climb the company ladder of success. A financial statement also benefits consumers or customers of a company by providing information about expansions, continuance, contributions to the local economy by patronage of local suppliers and the organisations long and short-term trends. Although a financial statement cannot provide users with all the information they might need, it is still a good point of origin for ascertaining information that is common to all users. Financial accounting is susceptible to insider trading, securities fraud, creative accounting, misleading financial analysis, bribery and kickbacks. The integrity and reliability of the financial accounting information of an organisation is important because of its use by internal and external entities. Many variables are used to ensure integrity in accounting information in a company such as the ethical behaviour of individual accountants, accounting principles, audits and the makeup of a company's internal structure. The purpose of Sainsbury's Supermarket Ltd management accounting is to maintain collecting, processing and transmission of information, support competitive decisionmaking to help manage the planning, control and evaluation of business processes and the company's strategy. Management accounting of the interesting things

is that it is difficult to find individuals in the company of Management Accountants "in the title." Are often many people within the organization is as accountants, but these people are usually as financial accounting, cost accounting, tax accountant or internal auditing division. However, the ability to develop and utilize good management accounting (including a lot more ground than the cost of the product cost accounting), in fact, is an important capability, and many people, including financial professionals, operations and marketing manager, senior management personnel, and information technology. In general, to examine a very large company like Sainsbury's Supermarket Ltd, each department a top accountant called the controller, and more, under the leadership of the management of the departments of accounting, controller. On the other hand, the controller usually report to vice president of finance, the department, the report of the president of the department and / or the Chief Finance Officer (CFO). All of these people are responsible for the flow of accounting information to support the planning, control and evaluation, occur within the organization. Management Accountant of Sainsbury's Supermarket Ltd, UK concerning to provide information manager people inside the company to command and control its operation. Management Accountant of Sainsbury's Supermarket prepares a large number of different reports. Some reports compare actual results with plans and benchmarks focus on managers or business units. Some reports provide a timely and frequent updates of key indicators, such as the receipt of orders, backlog of orders, capacity utilization and sales. Other analytical report writing, decline in profitability of specific product lines, and other issues need to be investigated. Other reports analyze the business situation or opportunity. On the contrary, for production of a limited set of specific provisions in the annual and quarterly financial statements in accordance with Generally Accepted Accounting Principles (GAAP) of financial accounting. The purpose of Sainsbury's Supermarket Ltd, management accounting is to provide a information that is needed to make accurate and sound economic decisions. The accounting information provides external parties, such as investors, creditors or tax authorities with a financial report. Managerial accounting is different from financial accounting because the former is for internal decision making and is not required to follow the rules issued by the standard setting institution. Financial accounts follow the guidelines according to the Generally Accepted Accounting Principles (GAAP). The occurrences of unethical practices in businesses and companies have become more frequent and common. An unethical action in a company can have a negative effect on the company as a whole that could lead to its

downfall. Many companies strive for good ethics to build credibility and a good reputation with consumers, suppliers and other organisations. The focus of Sainsbury's Supermarket Ltd management accounting shows on issues such as planning, control and decision-making of the strategic and operational management of the environment that is the truth of the conditional. Information economy transition to problematises the Sainsbury Supermarket Co., Ltd. Management originally designed to solve the labor deviant, but between now and the control method of the monitoring and control system of the decision. Therefore, the text of the mainstream of modern management accounting is mainly in the context of participation and support internal decision-making, in order to achieve organizational goals envisaged senior management technologies and processes. Sainsbury's Supermarket Ltd must adhere to the Corporate Social Responsibility (CSR) guidelines. It is the understanding that a business has a social obligation beyond making a profit. Many companies incorporate an internal corporate "code of ethics" to their mission statement that sets guidelines to help in the CSR process.
Part 3: Analytical Technique used by Sainsbury's Supermarket Ltd, UK

Michael, (2011), describes the UK's retain industry as a sector which is very dynamic, diverge and large. The large food retailers of UK offer greatest employment in the region, and according to Lars, Gulbrandsen, (2010), a total of 326,000 people are employed by Tesco, while J. Sainsbury's employs 147,500, ASDA employs 128,000 and Somerfield employs 54,000. Sources such as Julian, (2011) and Sainsbury's website inform us that there is high commitment by these food retailers towards recruiting and sustaining a socially as well as culturally diverse workforce. Data collection has been made from J.Sainsbury for the purpose of this research which comes at second in terms of size of retail companies in UK. According to Geoffrey and Andrew, (2011), the company is a key player in the retail industry with operation of 785 stores holding a market share of 14.7 %. For operational control, Sainsbury's has adopted a strategy of centralized one business (Holly and Duchaine, 2011). Vibrant transformation has been seen in Sainsbury's management since the current CEO, Justin King, was appointed in 2004 and the slogan of recovering Sainsbury's greatness was raised. To make each level of the organization more efficient, they are in the process of reshaping their culture of management and strategies. Personal Interviews were used for collection of data for the purpose of this research from the organization. Performance Management System is amongst the critical tools for management control. Performance management in the current context is constantly changing due to impact of new technology introduction and differences in

terms of culture; it is also become more complex as team members are more likely to have different viewpoints due to the above mentioned factors (Alessandro and Douglas, 2010). Recently, a performance culture is being created by many organizations which consist of many strategies so that contributions at an individual level can be developed for an overall busoness success (Erik and Hutchinson, 2011). As mentioned in Michael, (2011), performance management is the name given for this process (IPM, 1992). It is believed by managers that when it is understood by employees how their work contributes to attainment of the goals and written objectives of the organization (Holly and Duchaine, 2011). The introduction of systems of performance management is done for improvement of quantity as well as quality of work being done and also to bring in line the objectives of organization with all the activity (Alessandro and Douglas 2010). Performance management has the aim of establishing a culture of high performance in which responsibility is taken by teams as well as individuals for continuous improvement in business process and also in their own contributions and skills under a framework with provision of effective leadership (Armstrong, 2006). After studies of performance management systems in various organizations, on the other hand, revealed that many of the systems of performance management consisted of multiple contents and objectives (Andy, 2011). The systems, as said by the authors, might have a link with objectives of business and also in developing competences and skills of employees. It could be included in the system, at the same time, training, development, succession planning, planning, reviewing and setting of objectives and competencies also. On the contrary, for making the system more effective, such an integrated system should include various tools of a large numbers. The performance management process is a method of management architecture to assure that the organization and its entire resources are working collectively to optimize the organizations goals. Performance management provides a wide spectrum of understanding about performance drivers enabling an organization to compel for highest performance and better decision making. It highlights the importance of integration of human resource, process and information to the organization's goals and objectives (Zorn & Taylor, 2004). At Sainsbury's Supermarket Ltd, it is firmly believed that the process of performance management has to be in collaboration, where managers and employees share in the responsibility for goal setting, accountability, financial performance and the results of its performance. Sainsbury's Supermarket Ltd is one of the organisations, which is not only famous for its business intelligence but also for its management processes. It understands the importance of management decisions, which is distinctly proved with its

outstanding performance. A leader like Sainsbury's Supermarket Ltd has always given importance to strong and rigorous planning, which had made it analyze the need of the holistic approach towards performance management. Performance Management Framework at Sainsbury's Supermarket Ltd The performance management framework adopted by Sainsbury's Supermarket Ltd focuses on three fundamental principles, which are, adapting a forward looking view to business, ensuring integration among plans and department and effective decision making at all levels of organisation. These simple principles enable an organisation to take sound decisions, discover their ineffectiveness and make more balanced use of resources in planning and controlling activities. Furthermore, employees' performance management is always at the heart of the of human resource management processes of Sainsbury's Supermarket Ltd. The creation and implementation of a comprehensive and consistent performance management enables it human resource department to align managers and employees on company goals. The starting point of this plan is the evaluation of each employee, which can now easily be conducted with the help of performance management software (Perkins, and White, 2008). Formal Feedback Process at Sainsbury's Supermarket Ltd Performance management software can significantly reduce the time spent collecting paper forms, as automated reminders, status reporting and escalation processes contribute to improve the efficiency of tasks performed and their alignment with business objectives. This advancement also provides Sainsbury's Supermarket Ltd with the visibility on the alignment of employee goals and performance throughout the year, which should always be the keystone of the overall strategy for talent management in any company. Furthermore, Sainsbury's Supermarket Ltd also gives exceptional value to its customer's feedback; it maintains a separate suggestion box website for its customers and even offers rewards to its customers for providing their valuable feedbacks. Informal Feedback Process at Sainsbury's Supermarket Ltd Although assessments are generally annual or biannual events, the feedback should not be limited to formal review sessions. The feedback from employees and from customers is essential for continuous improvement, and therefore, it is highly weighted by Sainsbury's Supermarket. A regular and consistent management of performance can be a powerful tool for employee engagement. It creates an opportunity for officials and employees to review performance, share

feedback positive and negative, to identify goals and develop plans for development. Employee's assessment follow-up is also essential. Too often, this monitoring is neglected, which only adds to the frustration of employees and reduces the importance of the overall evaluation system. If a company sets goals, it is imperative that it should always re-evaluate. Companies, that neglect the development of their employees, are at risk of losing their talent pool and compromise their commercial success. Ultimately, a critical assessment process can waste the money to the company. Sainsbury's Supermarket Ltd believes in investing in training and development, to help its employees to improve their ability for long term collaboration (Chase, 2008). Steps Sainsbury's Supermarket Ltd takes to protect itself from Litigations Wal-mart highly emphasizes on its customer services. The task of Sainsbury's Supermarket Ltd is to minimize delivery time of its products (Lars, Gulbrandsen, 2010) ????????? ??????, ??????????? ??????? ??? ???, ??????? ??????, ??? ?????? ?????????? ? ?????????? ?????? ?? ??????.It has employed multi channel retailing system that provides enhanced customer experiences. The management of Sainsbury's Supermarket Ltd analyzes the customer data to personalize the promotion offers. Typical cross channel logistics capabilities required for better customer service are cross channel returns authorization, integrated pricing and promotion across channels. The firm manages the multi channel customer loyalty that is calculating points for the customer across channels and redemption across channels. They target the customer emails based on their shopping history, preferences and products ordered (O'Brien, 2002). High correspondence with customers enables them to address customers' issues effectively, which reduces the chances of litigations. It gives importance to manage disagreements and conflicts with grace. Disagreements and conflicts are normal in almost all relationships in which both parties have a common interest. In fact, the absence of these indicates the lack of interest in the work by the employee. Furthermore, it always believes in identifying the real cause of the problem in order to cut the issue from its roots. Conclusion To conclude, the whole concept of financial management, finance is the main backbone of the Steps Sainsbury's, without finance Steps Sainsbury cannot predicts its future. It is not necessary that company havi