UMMA UNIVERSITY
INDUSTRIAL ATTACHMENT REPORT
PLACE OF ATTACHMENT: NORTHWORLD MART SUPERMARKET
LIMITED
LOCATION
: GARISSA TOWN, GARISSA TOWN
STUDENT NAME:LIBAN IDRIS IBRAHIM
REG.NO
:DBM/2021/48162
PERIOD OF ATTACHMENT: SEPTEMBER-NOVEMBER, 2022
NAME OF UNDUSTRY BASED SUPERVISOR: MR.MAHAT MOHAMED
Declaration
I declare that this is my original report as attached at Northworld Mart Limited and that the report
has not been presented for any other award whatsoever in any other university or college
Name…………………………………reg.no:…………………..Date…………Sign………
University Supervisor
I acknowledge receipt of this report for assessment.
Name……………………………………..Sign……………………..Date………………..
Contents
Declartion .................................................................................................................................... i
Acknowledgement ...................................................................................................................... ii
Dedication ................................................................................................................................... iii
Abstract ....................................................................................................................................... iv
Table of contents… ...................................................................................................................... v
CHAPTER 1 ................................................................................................................................... 1
1.0 Introduction............................................................................................................................ 1
1.1Purpose scope and limitation .................................................................................................. 1
1.2The Supermarket Background ................................................................................................ 2
1.3The Organizational Structure.................................................................................................. 3
1.4 Objectives of the attachment .................................................................................................. 6
CHAPTER 2: Attachment details ................................................................................................... 7
2.1 Basic accounting and bookkeeping........................................................................................ 7
2.1.1 Source documents............................................................................................................ 7
2.1.2 Bookkeeping .................................................................................................................... 8
2.1.3 How to record the transactions ........................................................................................ 9
2.1.3 Accounting Journal Entries ........................................................................................... 11
2.1.4 Cash and accrual accounting system ............................................................................. 13
2.2 Inventory management system ............................................................................................ 15
2.2.1 Perpetual Inventory System........................................................................................... 15
2.2.2 Periodic Inventory System ............................................................................................ 15
2.3 Final accounts ...................................................................................................................... 18
2.3.1 Trading profit and loss accounts ................................................................................... 18
2.3.2 Balance Sheet ................................................................................................................ 20
2.3.3 Financial Analysis ......................................................................................................... 22
2.4 SWOT Analysis ................................................................................................................... 25
2.4.1 Strengths ........................................................................................................................ 25
2.4.2 Weaknesses ................................................................................................................... 25
2.4.3 Opportunities: ................................................................................................................ 25
2.4.4 Threats: .......................................................................................................................... 26
Using Data Compiled in a SWOT Analysis ........................................................................... 26
2.5 The Market Analysis ............................................................................................................ 28
2.5.1 Product mix ................................................................................................................... 28
2.5.2 Market niche and client base ......................................................................................... 28
2.6 Job analysis .......................................................................................................................... 31
2.6.1 The organizational performance .................................................................................... 31
CHAPTER 3: Discussion on gained experience .......................................................................... 32
CHAPTER 4: Conclusion and recommendation .......................................................................... 33
4.1. Conclusion .......................................................................................................................... 33
4.2. Recommendations ............................................................................................................... 33
References ............................................................................................................................. 34
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CHAPTER 1
1.0 Introduction
1.1Purpose scope and limitation
1.1.1 Purpose
The industrial attachment program fulfils part of the requirement in pursuing the Diploma in
Business Management in Umma University
This report serves to summarize the activities and experiences gained with Northworld Mart
Limited,Garissa (Former Naivas Supermarket-Garissa) located along Kisimayu road in Garissa
Town, Garissa County.
1.1.2 Scope and limitations
During the attachment, the student was involved in sales, bookkeeping, accounting, finance and
other business concepts. This report has only covered parts of the industrial attachment.
The experience the student has gained during the attachment has helped him fulfill the objectives
of the attachment.
However, due to the time aspect, the student was not able to do the final accounts in details since
the accounting period (the two months attachment duration) was limited. Time was not enough to
practice on the preparation of final accounts. Therefore, this report is limited to the few practices
I could only do.
Further work and experience done before and after the ten weeks of attachment are not described
fully in this report.
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1.2The Supermarket Background
Northworld Mart Limited(Naivas Garissa) built in the year2014. It started operating on 2ndJanuary
2015.It was officially opened on 25th April 2015 courtesy of the then Member of Parliament, Hon.
Aden duale who also served as the Majority Leader in the National Assembly. Today Northworld
Mart Limited is the main supermarket in Garissa County.
The Supermarket operates as a franchise. It operates under a brand name Naivas therefore
payingroyalties for using the brand. The parent Supermarket supports the dealer Supermarket
in employee training and marketing including advertising of its brand.
The Organizational Structure
The Supermarket is set up in a specific way i.e. functional structure, to accomplish different
goalsand this structure of the organization helps it progress toward accomplishing there goals.
This way the Supermarket achieves higher sales and profits.
The Supermarket mainly sells foodstuffs and clothing. It operates a lube andspares shop that sells
motor vehicle lubricants (oils), spares e.g. air cleaners, oil filters and car accessories. It also has
a hotel and pharmacy within its premises. The Supermarket also operates a select shop (minisupermarket) where motor vehicle owners, passengers and travelers and local people can buy
beverages, snacks,
The following table is a break-down of the Supermarket
.
Northworld Mart Garissa
A. Departments
1. Detergents section
2. Machinery and equipment arena
3. The Food store arena
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4. Clothing arena
5. The Select Shop
6. The Pharmacy
B. Categories
1. Forecourt
(i) Diesel Extra
(ii) Unleaded Extra
(iii)Kerosene
2. The Select Shop
(i) Grocery
(ii) Bakery
(iii)Beverages
(iv)Snacks
(iv) Households and sanitation
1.3 Objectives of the attachment
1. Determine the business structure i.e. sole proprietorship, LLC, corporation, partnership
2. How do financial analysis in the Supermarket.
3. Provide advice and assistance on opening a business
4. Provide advice on how to track expenses during your daily business activities
5. Explain the importance of keeping personal and business expenses separate.
6. The need to maintain accounting system
7. Explaining financial statements to understand the ins and outs of a business
8. Oversee Supermarket payroll and payment processes
9. Provide advice on estimated tax Payments you should make during the year.
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10. Close out the books of accounts and create financial reports at the end of the year.
11. Compile and submit your taxes, financial reports and all necessary paperwork.
12. How to manage business growth; determine areas for growth by analyzing cash flow
patterns, inventory management, pricing, and business financing.
13. Appraisal on property and equipment leasing and purchase
14. Prepare you for and guide you through an audit, if necessary
15. Create financial forecast you can make to better decisions in a business
16. To create a business budget that will support your business goals.
17. To acquire advice to assist the author with the sale in the business.
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CHAPTER 2: ATTACHMENT DETAILS
2.1 Basic accounting and bookkeeping
2.1.1 Source documents
Each time a Supermarket makes a financial transaction, some sort of paper trail is generated. That
paper trail is called a source document. If a small business writes a check out of its checking
account for office supplies, for example, the source document is the check along with the receipt
for office supplies.
If a Supermarket is audited, source documents back up the accounting journals and general ledger
asan indisputable audit trail.
Keeping a source document for a business is just like keeping your receipts for tax-deductible
items for your personal taxes. You have to have those receipts in case your taxes are audited. The
same is true for your business, but you don't just keep receipts for tax deductible expenses. You
keep receipts (source documents) for every financial transaction.
A source document describes all the basic facts of the transaction such as the amount of the
transaction, to which the transaction was made, the purpose of the transaction, and the date of the
transaction.
Examples of common source documents: canceled check, invoice, cash register receipt,
computer-generated receipt, credit memo for a customer refund, employee time card, deposit
slip, purchase order.
The source document should be recorded in the appropriate accounting journal as soon as
possible after the transaction.
The source document is essential to the bookkeeping and accounting process. It is the evidence
that a financial transaction occurred. After recording, all source documents should be filed away
in some sort of system where they can be retrieved if and when they are needed.
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2.1.2 Bookkeeping
Bookkeeping practices include setting up the books for a business, either by hand or on the
computer. Even if a Supermarket uses computerized accounting and bookkeeping, it needs to
knowor to employ people who understand the background of the data entry.
Northworld Mart Supermarket ltd. uses both single and double-entry bookkeeping. The
Supermarket keeps adetailed accounting of their financial transactions. This process is known as
bookkeeping. The survival of the business depends on the owner’s ability to establish good
accounting and bookkeeping practices.
Single-Entry Bookkeeping
Single-entry bookkeeping is probably works if a business is very small, simple, and with a low
volume of activity. It is actually similar to keeping a personal checkbook, to keep a record of
transactions like cash, tax-deductible expenses, and taxable income.
Single-entry bookkeeping is characterized by the fact that only one entry is made for each
transaction, just like in a check register. In one column, entries are recorded as a positive or
negative amount. In single-entry bookkeeping, a Supermarket can actually keep a two-column
ledger, one column for revenue and one for expenses. It’s still considered single-entry because
there is just one line for each transaction.
This type of bookkeeping is not for large, complex companies. It does not track accounts like
inventory, accounts payable, and accounts receivable. Single-entry bookkeeping can be used to
calculate net income, but you can’t use it to develop a balance sheet and track the asset and
liability accounts.
Transactions are a single entry, rather than a debit and credit made to a set of books like in
double-entry bookkeeping.
Double-Entry Bookkeeping
Most businesses, even most small businesses, use double-entry bookkeeping for their accounting
needs. Two characteristics of double-entry bookkeeping are that each account has two columns
and that each transaction is located in two accounts. Two entries are made for each transaction –a
debit in one account and a credit in another account.
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An example of a double-entry transaction would be if the Supermarket wants to pay off a
creditor.The cash account would be reduced by the amount the Supermarket owes the creditor.
That wouldbe the debit. Then, the double entry reduces the amount the business now owes to
the creditor account as it has received the amount of the credit the business is extending. That
is the credit.
If you want to keep track of asset and liability accounts, you want to use double-entry
bookkeeping instead of single-entry. Other advantages that double-entry bookkeeping has over
single-entry bookkeeping are that the owner can accurately calculate profit and loss in complex
organizations, financial statements can be prepared directly from the books, and errors or fraud
are easy to detect.
Examples of Bookkeeping Entries: Inventory Transactions, Cash Accounts Payable.
2.1.3 How to record the transactions
Debit and credit
Every business transaction has two sales e.g. there is a buyer and a seller. The business sells
product e.g. mattresses to a customer who buys the product. In order for the Supermarket to
keep a proper track of instructions, it uses the double entry to keeping transactions a record
system using debit and credit.
Recording debit and credit as a journal entry
The author was reminded some rules to follow so he does not make mistakes when using the
books for the Supermarket.
Rule No 1: Debits are always shown on the left side of a T - account and credits are always shown
on the right. The author first practiced debit and credit by recording them in T- account. Taccount are simple to use since they show which side of the ledger debit and credit go for a
particular business transaction later the student got to record to transactions in reality.
In actuality, accounting transactions are recorded by making accounting journal entries. Just as
like student got to learn theoretically in school there is a particular way that on accounting journal
entries made when recording debit and credit
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Debit are recorded on the first line flush with the margin, credit are recorded on the second line
and indented a couple of S
Recording debit and credit for asset account
Assets are item owned by the Supermarket e.g. inventory asset
 Debits are increases in asset account
 Credits are decreases in asset account
Rule No 2.Rule for asset. Increase in assets are debit as debits (left side of ledger)
Decrease in asset are credited as credits (right side of ledger)
Example; The Supermarket want to buy inventory for the select shop to gear up for holiday
sales.Inventory is a current asset. That Supermarket is going to pay for the inventory with cash.
The amount of inventory to be purchased is Ksh100, 000. The journal entry would look like
this:
Inventory Ksh 100,000
Cash Ksh100, 000
Since inventory has increased, it is a debit and cash is a credit since it decreased
Recording debits and credits for the liability accounts.
Liabilities are items on the balance sheet that are owed by the Supermarket to vendors or
financialinstitutions. Liabilities can be current liabilities such as accounts payable and accruals
or long-term liabilities such as bonds payable or mortgages payable.
For this business, the account is just called "owner's equity." They are treated exactly the same as
liability accounts when it comes to journal entries.
 Debits are decreases in liability accounts.
 Credits are increases in liability accounts.
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Rule for liability accounts. Increases in liabilities are recorded as credits. Decreases in liabilities
are recorded as debits and are recorded on the left side of the ledger.
Example, The Supermarket owes Cocacola Beverages company
supplies of beverages
Ksh231,670 and that bill is now due. What companies owe their suppliers are typically accounts
payable and a liability onthe balance sheet. The journal entry is recorded as:
Accounts Payable Ksh231, 670
Cash Ksh231, 670
Accounts payable is debited because that bill is paid and the account is decreased and cash is
credited because cash is an asset account that decreased because cash was used to pay the bill
Recording debits and credits for the expense accounts.
Expense accounts are those items on the income statement that cannot be tied to the sale of an
individual product. Expense accounts includes, advertising expenses and payroll taxes to office
supplies.
 Debits are increases in expense accounts
 Credits are decreases in expense accounts.
Rule for expense accounts. Increases in expenses are recorded as debits. Decreases in expenses
are recorded as credits.
Example, The Supermarket needs to stock up on office supplies. They purchase Ksh 750
in office
supplies using cash.
Office Supplies Ksh7, 500
Cash Ksh7, 500
Recording debits and credits for revenue (income) accounts
Revenue accounts come from a Supermarket's income statement. The Supermarket's revenue
usuallyincludes revenue from both cash and credit sales.
 Debits are decreases in revenue accounts
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 Credits are increases in revenue accounts.
The rule for revenue and income accounts. Increases in revenue or income are recorded as
credits. Decreases in revenue or income accounts are recorded as debits.
An Example of a journal entry, on a given day, the lube shop has Ksh 19,000 in cash sales. Sales
revenue for the shop would be recorded as:
Cash Ksh 19,000
Cash Sales Revenue Ksh 19,000
Sales revenue is posted as a credit. Increases in revenue accounts (the cash sales) are recorded as
credits. Cash, an asset account, is debited for the same amount. An asset account is debited when
there is an increase as there is in this case.
These steps are the basic rules for recording debits and credits for the five accounts that are part
of the expanded accounting equation.
2.1.3 Accounting Journal Entries
When the business makes a financial transaction, they make a journal entry in their accounting
journal in order to record that transaction. The transaction is recorded in the general journal or
one of the special journals for the most active accounts. The most common special journals are
the Sales Journal, the Purchases Journal, the Cash Receipts Journal, and the Cash Disbursements
Journal.
An accounting journal is a detailed record of the financial transactions of the business. The
transactions are listed in chronological order, by amount, by accounts that are affected, and in
what direction those accounts are affected. Depending on the size and complexity of the
business, a reference number can be assigned to each transaction and a note may be attached
explaining the transaction.
The accounting journal is the place where the details lie. The general ledger is where you look
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for the big picture. A sample accounting journal page has columns for the date, the account, the
amount of the debit, and the amount of the credit.
Using a Debit or Credit in a Journal Entry
One of the most difficult things to get a handle on when setting up your books is when to use a
debit and when to use a credit. Here are some simple rules. If you will follow these rules, it will
make your accounting life a lot easier.
You will always use both a debit and a credit for every journal entry. That is what the system of
double-entry bookkeeping is based on. You have two columns in your journal entry. Each will
have an equal entry - one for a debit, one for a credit.
Remember the format of the Accounting Equation where Assets = Liabilities + Owners Equity.
The Asset side is the left side of the equation and the Liabilities + Owner's Equity is the right
side of the equation. When you need to make a journal entry, refer to your Chart of Accounts to
see if the account you need to use falls on the left or right side of the accounting equation.
If the account is on the Asset or left side, that is the Debit side. A debit will increase those
accounts and a credit will decrease them. If the account is on the Liabilities and Owner's Equity
or right side, that is the Credit side. A credit will increase those accounts and a debit will decrease
them.
Journal Entries when Accounts have Normal Balances
One easy way to remember when to debit and when to credit an account is to remember the normal
balances of the five types of accounts on the Chart of Accounts. The normal balance is what the
account would have if increases are more than decreases. Here is a list of those accounts and their
normal balances. Remembering this list saves a lot of time.
Asset accounts - debit
Liability accounts - credit
Owner's equity - credit
Revenue accounts – credit
Expense accounts - debit
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For example, recording an entry to the asset account, debit the asset account and credit some
other account.
Examples of journal entries: Cash Sale, Credit Sale, Discounted Sales
Here is a very understandable tutorial on when to use a debit and when to use a credit for all five
types of accounts. If you have any confusion, take the tutorial and it will help!
Format of Journal Entry:
Northworld Mart Supermarket.
Account:
Debit
Cash
Ksh 20,000
Owners’ Equity
Credit
Ksh 20,000
2.1.4 Cash and accrual accounting system
The Supermarket most of the time uses Accrual system of accounting. The method of
accountingdepends on several factors.
Cash Accounting Systems
In cash accounting system, transactions are recorded when cash is actually exchanged. Income is
recorded when you receive a cash, credit card, or check payment. Expenses are recorded when
you pay them by cash, credit card, or check. A cash accounting system is based on cash flow.
If the Supermarket extends credit to customers and allows them to purchase items and pay for
themat a later time, this is accounts receivables. if you record them when you receive payment
that is cash accounting.
The Supermarket does not operate on cash accounting method mostly because products are often
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sold and are paid later or other types of transactions occur and payment or income is received at
a later time.
Accrual accounting system
An accrual accounting system is based on when the transaction happens rather than on when cash
changes hands. If the Supermarket earns income in January but isn’t paid until February, thenthe
income isn’t recorded until February under the cash accounting method, but it would be reported
in January under the accrual accounting method.
If the Co records the accounts receivables when incurred that is accrual accounting
Using an accrual accounting method gives you a better picture of your income and expenses and,
as a result, your profitability. Accrual accounting also requires the use of double-entry
bookkeeping. Double-entry bookkeeping requires knowledge of the accounting equation. Cash
accounting method, gives a better idea of the Supermarket’s cash flow.
When the Co files its first tax return with the Kenya Revenue Authority, it is recommended to
report the choice of accounting method. A Supermarket is required to use the accrual method
of accounting if any of the following three conditions apply to the business:
 The Supermarket is a C corporation.
 The Supermarket has inventory.
 The gross sales revenue is greater than Ksh 15 million
There are exceptions to this rule that the co. should discuss with tax accountant.
2.2 Inventory management system
Most businesses still use periodic inventory management, although perpetual inventory
management is becoming increasingly popular. Development of more sophisticated computer
scanning of inventory has allowed regular use of perpetual inventory systems by companies.
More and more businesses including Northworld Mart use scanners at the point of sale.
According tothe generally accepted accounting principles (GAAP), companies can use either
perpetual inventory systems or periodic inventory systems.
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2.2.1 Perpetual Inventory System
Perpetual inventory tracking system is a method of immediately accounting for inventory sales in
the inventory account, if there is no theft or spoilage.
It is an inventory management system where store balances of inventory are recorded after every
transaction. It eliminates the need for the store to close down constantly for inventory stock- taking
as perpetual inventory systems allow for continuous stock-taking. Perpetual inventory systems
keep a running account of the Supermarket's inventory.
Perpetual inventory systems involve more record-keeping than periodic inventory systems.
Every inventory item is kept on a separate ledger. These inventory ledgers contain information
on cost of goods sold, purchases, and inventory on hand. Perpetual inventory management
systems allow for a high degree of control of the Supermarket's inventory by management.
Perpetual inventory management is generally used by the Supermarket since it has the ability to
scanthe inventory items sold and uses point-of-sale inventory system.
Perpetual inventory systems provide the directors with a record of what is sold, where it was sold
from, when it was sold, and for what price it was sold. As a result, it allows for businesses to have
more than one location with one centralized inventory management system. Even with a perpetual
inventory management system, the Supermarket still needs a periodic, or manual, inventory count.
The scanned data should tell the business owner exactly what inventory should be on hand.
2.2.2 Periodic Inventory System
In Periodic Inventory system, Purchases, cost of goods sold, and inventory on hand cannot be
tracked until the end of the accounting time period when a physical inventory is performed and
ending inventory is compared against the sum of beginning inventory and purchases. A periodic
inventory system does not require day-to-day tracking of physical inventory. The major advantage
of doing a periodic inventory count is to determine how much inventory has been lost,stolen, or
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subject to spoilage. Periodic inventory management allows a Supermarket to know beginning
inventory and ending inventory but it does not track inventory on a daily basis. This
means there is lost information. Business owners cannot tell if inventory was sold or if it was
stolen, lost, or spoiled.
Using the periodic inventory management system, end-of-period inventory is calculated
according to the following formula:
Beginning Inventory + Purchases –Cost of Goods Sold = Ending Inventory.
Beginning Inventory is ending inventory from the previous time period.
Beginning Inventory + Net Purchases - Cost of Goods Sold = Ending Inventory
Cost of ending inventory can be calculated by using the LIFO or FIFO inventory accounting
methods, or other less common methods. LIFO, last-in-first-out and FIFO, first-in-first-out the
two most common inventory accounting methods. The two inventory management methods are
used by the Supermarket.
There are two common methods for accounting for this inventory.
LIFO - Last-In, First-Out
LIFO assumes that the last items put on the shelf are the first items sold. LIFO is a good system
to use when products are not perishable or become obsolete. Under LIFO, when prices rise, the
higher priced items are sold first and the lower priced products are left in inventory. This
increases a Supermarket's cost of goods sold and lowers their tax liability and, as a result, their
net income.
This inventory accounting method seldom approximates replacement costs for inventory, which
is one of its drawbacks. It also doesn’t correspond to the actual physical flow of goods.
A case example, Cocacola Company 2,000 liters of beverages to Northworld Mart Beverage
Station on Monday and the price at that time is Ksh 89/liter. On Tuesday, the price of Beverage
has gone up and supplier delivers 2,000 more litres at a price of Ksh 91.00/litre. Under LIFO,
the beverage station would assign the Ksh 91 liter Beverage to Cost of Goods Sold and the
remaining Ksh 89 litre of Beverage would be used to calculate the value ofending inventory at
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the end of the accounting period.
FIFO - First-In, First-Out
The income statement is the small business owner’s profit and loss statement for the business firm.
It is one of the four financial statements that business firms usually prepare. It measures the
profitability of the firm over a period of time.
It assumes that the first items added into the store/shelf are the first items sold. Going back to the
beverage industry example, under FIFO, the service station would assign the Ksh89 litre beverage
toCost of Goods Sold and the remaining Ksh 91 litre of beverage would be used to calculate the
value of ending inventory at the end of the accounting period.
Financial Statement Problems with LIFO
A LIFO liquidation can result when your Supermarket experiences declines in your inventory
quantities. In this case, a lot of Supermarket’s older inventory is sold or liquidated. This creates
an inflated profit margin that isn't real and seriously distorts net income. This has across the
boardimpacts. The LIFO liquidation profits should be added to the current ratio numerator and
adjustthe
Northworld Mart Co. since it’s a large business has perpetual inventory systems although it also
usesperiodic inventory systems sometimes. The rest of their financial and accounting systems are
computerized.
2.3 Final accounts
2.3.1 Trading profit and loss accounts
The income statement is the business’s profit and loss statement for the business firm. It is one of
the four financial statements that business firms usually prepare. It measures the profitability of
the firm over a period of time. The income statement below is presented step-by-step so as to look
at the profit or loss after each expense is deducted
This is the total estimate of amount of sales in that the firm has made in between March and May
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2021.
Ksh 5,000,000 entry is for cost of goods sold. This is the cost specifically associated with units
of product sold. Cost of goods sold is usually the largest expense. Subtract cost of goods sold
from gross sales to get gross profit.
After you get gross profit, you then subtract all of your other expenses from this number in order
to generate your net profit.
From the Ksh5, 000, 000 gross profits, the next expense you subtract is selling and
administration expenses. This Ksh2 500, 000 items represents your office expenses and sales
commissions. Depreciation expense, depreciation is a non-cash expense and serves as a tax
shelter so it is shown on the income statement.
After subtracting out selling and administrative expenses and depreciation, you arrive at your
operating profit. It is also called earnings before interest and taxes (EBIT), which in this case is
Ksh1, 700, 000.
After you calculate EBIT, the next step is to calculate interest expense. Interest is what you pay
on any debt your Supermarket has. In order to calculate the interest on debt, you have to know
the interest rate you are paying and multiply it by the principal amount of your debt. For this
example, the interest amount is assumed at Ksh300, 000 and is stated.
After subtracting your interest expense from EBIT, you get earnings before taxes. Then, you fill
in the amount you pay in KRA, and payroll taxes. The tax rate, in this example, is 40%. After you
subtract that expense, you are finally at the earnings available to your common shareholdersas
stated.
If the Supermarket has investors in the firm or if the Directors take a salary from the firm, record
thedraw or the dividends.
Then, the firm's net income or what you have left to plow back, or reinvest, into the firm in the
form of retained earnings.
This is an estimate of Northworld Mart Co Ltd. income statement. The income statement of the
Supermarket may be a little more complex and contain more line items. This statement should
serveto give the general idea of the students understanding of how a profit/loss statement, or
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income statement is prepared.
Income Statement
Northworld Mart
Incomestatement
For the period March to May 30th 2022
Sales
Ksh10,000, 000
Less: Cost of Goods Sold
ksh5000, 000
Gross Profit
ksh5000, 000
Less expense:
Selling & Administrative Exp
ksh2500, 000
Depreciation
ksh800, 000
Operating Profit (EBIT)
ksh1700, 000
Less: Interest expense
ksh300, 000
Earnings Before Taxes
ksh1400, 000
Taxes (.40%)
ksh560, 000
Earnings Available to Common Shareholders
ksh840, 000
Dividends or Owner Draw
ksh200, 000
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Net Income
Ksh 640, 000
2.3.2 Balance Sheet
One of the important statements in financial statement analysis is the balance sheet. The balance
sheet shows Supermarket’s assets, what the Supermarket own; liabilities, what the Supermarket
owes; and owner’s equity. Below is a discussion of the items on a sample balance sheet.
Assets
Line 1 is the firm’s cash account. The business keeps some cash on hand for day-to-day
transactions. The Business firm also needs to keep cash on hand for emergencies and to take
advantage of any bargains they might find in the marketplace.
Line 2, accounts receivable, represents what the credit customers owe the Supermarket since
the firm extends credit.
The balance sheet is like a snapshot of a firm’s financial position at one point in time, the figure
for accounts receivable and all the other accounts is accurate for the day on which this financial
statement was developed.
The value of the firm’s inventory is stated on Line 3. Inventory is simply the products the firm
has for sale. It can be valued using a number of different methods. Two commonly-used methods
i.e. LIFO and FIFO.
The last asset on the sample balance sheet is fixed assets. This asset is stated on Line 4. Fixed
assets include any equipment and vehicles owned by the co. and also any buildings. Fixed
assets normally refer to the large and highly valued assets that are owned by the business firm
and those that can be depreciated over time.
The value of the asset accounts is totaled and stated on Line 5. Total assets are the value of
everything your firm owns. In this example, that amount is Ksh820,000.
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Liabilities and Equity
Liabilities are the debt your firm owes to its creditors.
Line 6 lists accounts payable. Accounts payable are the short-term credit accounts that the
Supermarket owes your suppliers. Line 7 shows any long-term bank loans or loans from other
sources that the business has taken out with a maturity of more than a year. It may have had to
use long-term loans in order to keep the firm solvent.
Line 8 shows the amount of owner’s capital that has been invested in the firm. This is the money
that the owner and any other investors have put in the firm.
The last line, line 9, totals the amount of liabilities and equity. This is the total amount the firm
owes plus the owners’ investment in the firm. The total of the liabilities and equity must equal
total assets as the firm can’t own more than it owes
Balance Sheet
NORTHWORLD MART Supermarket Balance Sheet
30th May ,2015
Assets
1.Cash
Ksh 40,000
2.Accts Rec
200,000
3.Inventory
180,000
4.Fixed Assets
400,000
5.Total Assets
820,000
Liabilities and Equity
6.Accts Payable
Ksh 180,000
7.LT Bank Loans
240,000
8.Owner's Capital
400,000
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9.Total Liab & Equity
820,000
2.3.3 Financial Analysis
Profitability Ratio Analysis
Every firm is most concerned with its profitability. One of the most frequently used tools of
financial ratio analysis is profitability ratios which are used to determine the Supermarket's bottom
line and its return to its investors. Profitability measures are important to Supermarket managers
andowners alike.
Ratios show a Supermarket's overall efficiency and performance. We can divide profitability
ratiosinto two types: margins and returns. Ratios that show margins represent the firm's ability
to translate sales Sold in shillings into profits at various stages of measurement. Ratios that show
returns represent the firm's ability to measure the overall efficiency of the firm in generating
returns for its shareholders.
Margin Ratios
Gross Profit Margin
The gross profit margin looks at cost of goods sold as a percentage of sales. This ratio looks at
how well a Supermarket controls the cost of its inventory and subsequently passes on the costs to
itscustomers. The larger the gross profit margin, the better for the Supermarket.
The calculation is:
Gross Profit/Net Sales =
%.
Both terms of the equation come from the Supermarket's income statement.
Operating Profit Margin
Operating profit is also known as EBIT and is found on the Supermarket's income statement.
EBIT is earnings before interest and taxes. The operating profit margin looks at EBIT as a
percentageof sales. The operating profit margin ratio is a measure of overall operating efficiency,
incorporating all of the expenses of ordinary, daily business activity.
The calculation is:
EBIT/Net Sales =
%.
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Both terms of the equation come from the Supermarket's income statement
Net Profit Margin
When doing a simple profitability ratio analysis, net profit margin is the most often margin ratio
used. The net profit margin shows how much of each sales shilling shows up as net income after
all expenses are paid. For example, if the net profit margin is 5%,that means that 5 cents of every
shilling is profit.
The net profit margin measures profitability after consideration of all expenses including taxes,
interest, and depreciation.
The calculation is:
Net Income/Net Sales =
%.
Both terms of the equation come from the income statement.
Cash Flow Margin
The Cash Flow Margin ratio is an important ratio as it expresses the relationship between cash
generated from operations and sales. The Supermarket needs cash to pay dividends, suppliers,
service debt, and invest in new capital assets, so cash is just as important as profit to a business
firm.
The Cash Flow Margin ratio measures the ability of a firm to translate sales into cash.
The calculation is:
Cash flow from operating cash flows/Net sales =
%.
The numerator of the equation comes from the firm's Statement of Cash Flows. The denominator
comes from the Income Statement. The larger the percentage, the better
Returns Ratios
Return on Assets (also called Return on Investment)
The Return on Assets ratio is an important profitability ratio because it measures the efficiency
with which the Supermarket is managing its investment in assets and using them to generate
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profit.It measures the amount of profit earned relative to the firm's level of investment in total
assets. The return on assets ratio is related to the asset management category of financial ratios.
The calculation for the return on assets ratio is:
Net Income/Total Assets =
%.
Net Income is taken from the income statement and total assets are taken from the balance sheet.
The higher the percentage, the better. That means the Supermarket is doing a good job using its
assets to generate sales.
Return on Equity
The Return on Equity ratio is perhaps the most important of all the financial ratios to investors in
the Supermarket. It measures the return on the money the investors have put into the Supermarket.
This is the ratio potential investors look at when deciding whether or not to invest in the
Supermarket.
The calculation is:
Net Income/Stockholder's Equity =
%.
Net income comes from the income statement and stockholder's equity comes from the balance
sheet. In general, the higher the percentage, the better, with some exceptions, as it shows that the
Supermarket is doing a good job using the investors' money
Cash Return on Assets
The cash return on assets ratio is generally used only in more advanced profitability ratio
analysis. It is used as a comparison to return on assets since it is a cash comparison to this ratio
as return on assets is stated on an accrual basis. Cash is required for future investments.
Comparative Data
Financial ratio analysis is only a good method of financial analysis if there is comparative data
available. The ratios should be compared to both historical data for the Supermarket and
industry data.
There are so many financial ratios - liquidity ratios, debt or financial leverage ratios, efficiency
or asset management ratios, and profitability ratios - that it is often hard to see the big picture.
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2.4 SWOT analysis
A SWOT analysis is a strategic planning tool that helps a business owner identifies his or her
own strengths and weaknesses, as well as any opportunities and threats that may exist in a
specific business situation. A SWOT analysis is most commonly used as part of a marketing
plan, but it is also a good tool for general business strategizing, and to use as a starting point for
team discussions.
When conducted thoroughly, a SWOT analysis can uncover a wealth of information, and can be
useful in a number of situations.
A SWOT analysis basically involves -- Strengths, Weaknesses, Opportunities, Threats.
2.4.1 Strengths
Think about the attributes of yourself and your business that will help you achieve your
objective.
Questions to consider:
 What do you do well?
 What are your unique skills?
 What expert or specialized knowledge do you have?
 What experience do you have?
 What do you do better than your competitors?
 Where are you most profitable in your business?
2.4.2 Weaknesses
For this quadrant, think about the attributes of yourself and your business that could hurt your
progress in achieving your objective.
Questions to consider:
 In what areas do you need to improve?
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 What resources do you lack?
 What parts of your business are not very profitable?
 Where do you need further education and/or experience?
 What costs you time and/or money?
2.4.3 Opportunities:
Opportunities are the external conditions that will help you achieve your objective.
Questions to consider:
 What are the business goals you are currently working towards?
 How can you do more for your existing customer or clients?
 How can you use technology to enhance your business?
 Are there new target audiences you have the potential to reach?
 Are there related products and services that provide an opportunity for your business?
2.4.4 Threats:
Threats are the external conditions that could damage your business's performance.
Questions to consider:
 What obstacles do you face?
 What are the strengths of your biggest competitors?
 What are your competitors doing that you are not?
 What’s going on in the economy?
 What’s going on in the economy?
Using Data Compiled in a SWOT Analysis.
One of the most important parts of your SWOT analysis is using the data you compiled to
identify new strategies and goals for your business. For example, you can:
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Create a plan to build up your strengths even more
List ways you can work on building up your weaknesses
Set SMART goals for each of the opportunities you identified
Devise a plan to use your strengths to decrease the threats you identified Then,
look for ways to combine data from different stages in even more ways:
Explore how you can combine your strengths and opportunities to develop new strategies
try combining strengths and threats to identify threats you can eliminate
Look at your weaknesses and opportunities to create a list of areas ready for improvement.
Make a list of areas to avoid that fall under weaknesses and threats
Once you understand how to compile your SWOT data and find ways to use it strategically, the
SWOT analysis will be a tool that you can use over and over in your business to explore new
opportunities and improve your decision-making process.
SWOT Analysis Example: Each SWOT analysis is totally unique, but here is a sampling of some
items that might show up in a business SWOT analysis:
INTERNAL FACTORS (things you have control over)
Strengths
Brand strength (do people recognize your business name?)
Unique product or technology
Existing customer base
Strong sales team
Processes, systems (i.e. organized customer management system)
Weaknesses
Poor online presence
Low gross margin
Low repeat customer sales
Disorganized internal processes
Low customer retention
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EXTERNAL FACTORS (things you don’t have control over)
Opportunities
Favorable economic environment (i.e. recession lifting)
Lowered taxes (business or consumer)
New distribution channel
New technology available
Decrease in competition
Threats
Changing customer preferences
Aging
customer
base
Economic
conditions
Increasing
competition
Changes in government policy
Next you'll have the opportunity to view a real-world SWOT analysis
2.5 The Market Analysis
Marketing is all about how an organization/Supermarket or an individual sells its products
and/orservices. It is also about, finding and exploiting a market of buyers for the product or
service.
2.5.1 Product mix
It is the total number of product lines that a Supermarket offers to its customers, .i.e. the
Supermarketmay sell multiple lines of products. It is also known as product assortment. The
assortment ofgoods and services must be maintained in order to meet customer needs.
The product mix includes; product, price, place and promotion. Sometimes these products are
fairly similar, other times the product line are vastly different. Northworld MartSupermarket
practices both similar and different product lines. For example, the Supermarket’s main business
is to sell fueland also operates a lube and spares shop, where they sell similar products to the main
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business. Italso runs a select shop which is a different product line. The final product class is the
anticipatedresults of the goods and services
2.5.2 Market niche and client base
Northworld Mart is the main Supermarket in Garissa Area. There are other supermarkets
around.
The business thrives mainly because;

It is easily visible from the busy Kisimayu highway.

Easily accessible location.

Lack of comparable competition.

Incentives to local companies such as Hulugho Stores

Attractive convenience store.
The market analysis section of the business comes after the products and services section and
provides a detailed overview of the industry the Supermarket sells its products and/or service
in,including statistics to support your claims.
In general, the market analysis section should include information about the industry, market,
competitors and how the Supermarket makes a place for its own products and services.
Example of the Market Analysis Section of a Business
The market analysis section of the business include the following parts:
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(i)
Industry Description and Outlook: Detailed statistics that define the industry
including size, growth rate, trends and outlook.
(ii)
Target Market: Who is your ideal client/customer? This data includes demographics
on the group you are targeting including age, gender, and income level and lifestyle
preferences. This section also include data on the size of the target market, the
purchase potential and motivations of the audience, and how to reach the market.
(iii)
Market Test Results: This is where the Supermarket includes the results of the
marketresearch conducted as part of its initial investigation into the market.
(iv)
Lead Time: Lead time is the amount of time it takes for an order to be fulfilled once a
customer makes a purchase. This is where the Supermarket provides information on
the research completed on how long it will take to handle individual orders and large
volume purchases, if applicable.
(v)
Competitive Analysis: Who is your competition? What are the strengths and
weaknesses of the competition? What are the potential roadblocks preventing you
from entering the market?
Here is a collection of tips that the Supermarket uses to help have an effective and wellroundedmarket analysis for the business.
1. Use of the Internet. Since much of the market analysis section relies on raw data, the
Internet is a great place to start. A series of searches uncovers information on
competition, and can conduct a portion of market research online.
2.
Be the Customer. One of the most effective ways to gauge opportunity among the target
market is to look at your products and services through the eyes of a purchaser. What is
the problem that needs to be solved?
How does the competition solve that problem?
How will you solve the problem better or differently?
3. Cut to the Chase. It can be helpful to the business audience if you include a summary of
the market analysis section before diving into the details. This gives the reader an idea
about what's to come and helps them zero in on the most important details quickly.
4. Conduct Thorough Market Research. Put in the necessary time during the initial
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exploration phase to research the market and gather as much information as you can. Send
out surveys, conduct focus groups, and ask for feedback when you have an opportunity.
Then use the data gathered as supporting materials for your market analysis.
5. Use Visual Aids. Information that is highly number-driven, such as statistics and metrics
included in the market analysis, is typically easier to grasp when it's presented visually.
Use charts and graphs to illustrate the most important numbers.
6. Be Concise. In most cases, those reading your business plan already have some
understanding of the market. Include the most important data and results in the market
analysis section and move the support documentation and statistics to the appendix.
7. Relating Back to the Business. All of the statistics and data incorporated in a market
analysis should be related back to the Supermarket’s products and services. After
outlining the target market's needs, the Supermarket focuses on how it is uniquely
positioned to fulfillthose needs.
2.6 Job analysis
A job analysis is the process used to collect information about the duties, responsibilities,
necessary skills, outcomes, and work environment of a particular job. You need as much data as
possible to put together a job description, which is the frequent outcome of the job analysis.
Additional outcomes include recruiting plans, position postings and advertisements, and
performance development planning within your performance management system.
Activities involved in Job analysis:

Reviewing the job responsibilities of current employees.

Internet research and viewing sample job descriptions online or offline highlighting
similar jobs.

Analyze work duties, tasks and responsibilities that need to be accomplished by the
employee filling the position.

Researching and sharing with other companies that have similar jobs.

Articulation of the most important outcomes or contributions needed from the position.
The more information you can gather, the easier to organize the job.
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2.6.1 The organizational performance
The Supermarket conducts a corporate performance to execute the policies, processes and values
of the organization to improve/ maximize the efficiency of its resources both tangible and
intangible. The resources may be affected by internal or external factors.
Organizational performance encompasses:

Financial performance; profits, return on assets, return on investment.

Product market performance; sales, market share etc.

Shareholders return.
Organizational performance encompasses the actual output or results of an organization as
measured against its intended outputs (goals/objectives)
Northworld Mart Limited provides accountants and auditors to assess the organizational
performance. Thishelps them to identify the best performing supermarketand it gets a reward
from Naivas.
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CHAPTER 3: Experience Gained
The most important goal of the Industrial Attachment is the acquisition of actual real world
experience. It is an opportunity to learn firsthand about valued requirements that can’t be taught
or experienced in the classroom. Industrial attachment gave the students a full and realistic view
of workplace environment. The students training experience has aided him in analyzing his
options and situations.
During the Industrial Attachment, the attaché gained skills in terms of:

Technically
There are many technical problems which require only a quick fix from someone with adequate
technical skills.
I have gained more knowledge on Point-of-sale software that I used in the sales and more
knowledge on use of computer has been gained.

Professionally
During Industrial Attachment I have seen first-hand what happens in a typical day on the job.
The student got a realistic idea of the positive and negative parts of the job which helped him to
make a more informed choice.
Meeting people in the job helped him to ask them questions, such as what they like best about
their job, how they ended up in their line of work, and what qualifications they have.
Meeting people in the job also helped the author to start building a network of contacts, which
can help him find a job later on. He has learnt about related jobs in the same field, which could
give him more ideas about what kind of career he might go into.

Socially
Social or relational skills are the emergent properties arising from the institution system – the
institution and the people working in the institution.
The student has gained the network of relationships and features of social life within the
Supermarket and the knowledge tied up and shared in these relationships.
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He also gained the ability to work together with other people in value creation, the corporate
culture, beliefs lived and values demonstrated by employees.
After the training, he student is able to;
o

Appreciate the importance of human relationships and work attitudes.
Understand the constraints of working life and functional relationships within and
between organizations.

Be orientated towards work processes.

Apply theoretical concepts and school based skills to practice.

Develop work attitudes like curiousness, self-confidence, maturity and self-reliance.

Obtain knowledge of potential careers and develop new areas of interest.
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CHAPTER 4: Conclusion and Recommendation
4.1. Conclusion
On the whole, this attachment was a useful experience. The student gained new knowledge,
skills technically and professionally and also met many new people. He achieved several of his
learning goals, however for some the conditions did not permit.
He got insight into professional practice. He learnt the different faces of working within a limited
Supermarket He experienced that financing, as in many organizations, is an important factor for
the progress of companies.
Industrial attachment education is not one sided, but it is a way of sharing knowledge, ideas and
opinions.
The attachment was also good to find out the students strengths and weaknesses are. This helped
him to define what skills and knowledge he has to improve in the coming time. It would be better
that the knowledge level of the language is sufficient to contribute fully to projects. After his
graduation he wishes to work with Northworld Mart Supermarket to start his working career.
However hecould perform certain tasks in accounts better if he had more time to practice/know
more the business concepts applied in cetacean studies. It would also be better if the author could
present and express himself more confidently.
At last the industrial attachment has given the student new insights and motivation to pursue a
career in accounts and finance.
4.2. Recommendations
The following are some recommendations

The period of practical training is not enough for the students to acquire all the necessarily
skills and knowledge needed, therefore Umma University should try toincrease the period of
earring out Industrial Attachment to least three months.
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References
o V. Booth, communication in science, 2nd edition Cambridge University Press.
1993
o R.A Rathbone, Communicating technical information, 2nd edition, Addisonwesley 1985.
o C.H. Sides, How to write and present technical information, 2nd edition
Cambridge Univ. press 2009
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