Management Accounting

Management AccountingVrije Universiteit AmsterdamFebruary 9, 2015Drs Yves Boeltjes de Vries RA RC / Stefan van Driel

BackgroundYves Boeltjes de Vries:Master Business Economics - University of AmsterdamPostgraduate Accountancy - University of AmsterdamPostgraduate Controller - Vrije Universiteit AmsterdamArthur Andersen & Co AccountantsMexxExaminer VU Postgraduate Accountancy Management AccountingStrategyLong term planningBudgetingAccountingReportingForecastingManagement Accounting (II)Important for:Execution of every functionSteering and controlDetermining realization statusControlling spending available budget Basics Management Accounting are KeyAccountingdebet, credit journal entriesaccrual accountingcapitalizationcash flowBusiness planninglong term strategy basedsensitivity analysis

Basics Management Accounting are Key (II)Budgettingfixed versus variable costsdirect versus indirect costsForecastingFull year estimatingRolling forecastingComparison with budgets Key Performance IndicatorsConsolidated / TopNet salesGPEbit / operating marginEBITDA / Cash flow FrequencyYTD versus FYE

Functional KPIsSales Net sales (customers)Net sales per square meter (shops)GP (customers)GP per square meter (shops)Traffic KPIsGrowth rates (sss %)

Comparison with BudgetsYTD versus FYEWholesale versus retailFunctional KPIs (II)Design

Cost price per styleGP per style% dropped stylesVolume per styleTurnover per styleAchieve

Variance analysis (price/costs/exchange rate)Functional KPIs (III)Property

ROICapexTurnover per m2

Marketing

Campaign costsExposure ratesActual versus budget

Functional KPIs (IV)Sourcing

Cost / GP per styleFreight rates (budget versus actual)Duty ratesTime needed for ProductionTime needed for transport

Warehouse/distribution

Storage ratesHandling ratesOutbound cost rates

Examples of FunctionsSales managerMarketing managerDistribution or warehouse managerSourcing managerProcurementProperty managerIndependent entrepreneurExamples of Functions (II)and obviously also:

CFOFinancial controllerBusiness controllerTax managerTransfer PricingPricing of transactions between two related entitiesImportant for:

maximizing operating performancedocumentation for tax authoritiesfinancial efficienciesperformance incentives

Transfer Pricing (II)Criteria Transfer Pricing Systems:

Provide the right incentives to enhance strategy congruent decisionsReflect responsibility structureFacilitate fair and transparent performance measurementEnhance efficiency of administrative processes

Flowcharts Mexx supply chain and TPSintercompany structure before 199717Mexx Europro-ductionMexx BoutiquesSupp-liers: Far East Turkey EuropeMexx Far EastMexx EuropeMexx GermanyMexx InternationalMexx RetailMexx BelgiumWholesaleCustomersRetailCustomersWholesaleCustomersRetailCustomersMexx FranceMexx BelgiumMexx ModehandelsMexx HollandGoodsSERVICESGOODSGOODSGOODSGOODSGOODSGOODSGOODSGOODSGOODSSERVICESSERVICESGOODSGoods18intercompany structure after 1997Mexx Retail entitiesMexx Sourcing AgentsMexx Sales AgentsMexx Far EastMexx EuroproductionMexx NetherlandsMexx FranceMexx BelgiumMexx ScandinaviaXxtra KinderkledingBoutiquesBelgiumMexx LtdScandinaviaCentral CompanyWholesale CustomersThird Party SuppliersGoods at landed costGoods at landed costGoodsGoodsConsumersMexx FO entities Mexx Germany Holding Mexx Ltd. Mexx Boutiques Mexx Austria GmbH Mexx Belgium NV

Goods atlanded costGoods

Mexx Supply chain# 1 Image fee# 2 Design fee# 3 HQ fee# 4 LRD remuneration