Generating Financial Statement

Running Head: ACCOUNTING FOR MANAGERS
ACCOUNTING FOR MANAGERS
Name of the Student
Name of the University
Author Note

1ACCOUNTING FOR MANAGERS
Table of Contents
Introduction................................................................................................................................2
Overview of Company...........................................................................................................2
Discussion..................................................................................................................................3
Task One- Evaluation of Thomas Cook Performance...........................................................3
Task Two- Advice for Saving the Company..........................................................................7
Task Three-Business Model Employed by Thomas Cook.....................................................8
Conclusion................................................................................................................................10
Reference..................................................................................................................................12

2ACCOUNTING FOR MANAGERS
Introduction
Financial accounting is described as the specialized branch of accounting that keeps
track of the financial transactions of firm. It is with the help of using the standardized
guidelines, transactions of company are summarized, recorded and presented in financial
statement or report, which are balance sheet or profit or loss account. The primary
responsibility for generating financial statement and related disclosures, which fairly reflects
financial conditions and results of firm. The companies uses financial reports on the routine
schedule. These statements are considered to be external because it is given to the users
outside company with the primary recipients being the stockholders and the lenders (Haller
and van Staden 2014). Hence, this report aims to evaluate Thomas Cook performance in the
areas of profitability, liquidity, working capital efficiency, long-term financial services and
the perspective of investors. Further, advice will be given based on the things that could have
been done. Lastly, the discussion will be on business model employed by the Thomas Cook
and the philosophy of company that was responsible for its fail.
Overview of Company
Thomas Cook was UK based Travel Company. It was one of the oldest company of
UK. The collapse of Thomas Cook has sent ripples across globe. It operated through the
Thomas Cook Condor, Airtours, Sunquest Groups, Direct Holidays, Ving and Neckermann.
The formation of Thomas Cook was in June 19, 2007, which was result of merger of the
MyTravel Group and Thomas Cook AG (Thomascookgroup.com. 2019). The operations of
company were in two different segments, which includes airline and tour operator. Thomas
Cook provided business travelers and leisure with the traveler’s cheques and foreign
currency. The country United Kingdom has been forced for launching biggest peacetime
repatriation in history with the British tourist stranded in the far-flung locations (Cook 2019).

3ACCOUNTING FOR MANAGERS
Discussion
Task One- Evaluation of Thomas Cook Performance
Profitability
The profitability ratio includes group of the metrics, which is used for assessing
ability of the company to generate revenue that is relative to its costs of operations, revenue,
shareholder’s equity and balance sheet assets. The ratio of profitability also shows how well
the company uses its existing assets for generating value and profit for shareholders. It is the
set of measurement that is used for determining business ability for creating earnings. In case
of Thomas Cook, the trend of Gross profit margin ratio of company has decreased over the
years (Hermawan and Mulyawan 2014). However, average gross profit margin of its
competitor is 42.44. Further, the trend of net profit margin of Thomas Cook from 2015-2018
has majorly decreased over years and in 2018 it becomes -2%. However, the average net
profit margin of its competitor Easy Jet is 5.47, which is very good. The investors of
company and customers were majorly affected by the lower profitability position of company
(Kieso, Weygandt and Warfield 2019).
Profitability
GrossProfit MarginRatio 2018 2017 2016 2015
Gross Profit 1,933.00 1,990.00 1,822.00 1,772.00
Net Sales 9,584.00 9,006.00 7,812.00 7,834.00
Result 20% 22% 23% 23%
Net Profit MarginRatio 2018 2017 2016 2015
Net Profit (163.00) 9.00 9.00 19.00
Sales 9,584.00 9,006.00 7,812.00 7,834.00
Result -2% 0% 0% 0%
ThomasCookGroup
Table 1: Profitability Ratios
Liquidity