ECONOMIC & FINANCIAL MANAGEMENT

ECONOMIC & FINANCIAL MANAGEMENT
[Module Name & Code]
[Assessment Number]
[Student Number]
[Word Count]

1ECONOMIC & FINANCIAL MANAGEMENT
Executive Summary
The success of business depends in the part on country’s economic systems, where the
company is located and where its products are sold. The economic system of nation is
combination of the laws, policies and choices made by the government foe establishing the
systems, which determine the goods and services to be produced and allocated. Business and
economic goes hand in hand. The goods and services are provided by business for driving
economic output. In this report, discussion will be on economic factors and its impact on
economic factors. Moreover, ratio analysis of three years will be done for analyzing
performance of Thomas Cook. Hence, it can be said that the performance of company has
been deteriorated over the years. The strategic actions that should have been taken by
company includes less debt uses, reducing cost of business operations and maintaining good
balance of working capital.

2ECONOMIC & FINANCIAL MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
A) Analysis of Economic Factors and their Impacts on Business.............................................3
Macro-Economic Factors...................................................................................................3
Micro-Economic Factors....................................................................................................5
Performance of Thomas Cook...........................................................................................6
B) Calculation of Ratios.............................................................................................................8
C) Accounting Ratios and their Importance in Business...........................................................8
D) Recommendations...............................................................................................................13
E) Conclusion...........................................................................................................................14
Reference..................................................................................................................................16

3ECONOMIC & FINANCIAL MANAGEMENT
Introduction
Business provide services and goods, which drives economic output. The business
deals with selling of services of products to the customer, however, economic deals with the
demand and supply of all the products in country. There exists relationship in between
business and economics because in general business performance affects the economy at
large. Further, business is affected by all the significant trends in economy. Economic factors
affecting the businesses are interest rates, inflation, employments factors, economic factors
and overall all the economic indicators. Any changes in these factors results in causing
movements along curve and shift along the curve (Rochlitz 2017). Further, ratio analysis is
the quantitative method to gain insights into company’s financial performance by making
comparison with the prior years (Liang et al. 2016). Hence, this report includes the analysis
of economic factors and its impact on Thomas Cook Business. Further, ratio analysis will be
done to analyze company’s financial position.
A) Analysis of Economic Factors and their Impacts on Business
Macro-Economic Factors
Macroeconomics factors helps in taking overall view of economy. It determines
aggregate demand as well as aggregate investment in economy. The economy of UK has
weakened and slowed down, since 2012. The GDP growth in final quarter of the 2018 fell
down to quarterly rate from 0.6 percent to 0.2 percent in the previous quarter. The exports of
the country has suffered from the global weakness and the businesses and consumers
increasingly grew concerned about lack of plan for, when the Britain is due for leaving EU
(Azam, Iqbal and Tayyab 2014). The economy of UK has been contracted by 0.4 percent.
There has been great drop in business investment during the years. The household spending
has been remained resilient. The investment of business has stalled, since referendum of

4ECONOMIC & FINANCIAL MANAGEMENT
2016, which Boé blamed for stagnating the economic productivity. The goods trade deficit of
Britain came as expected at 12.1 billion pounds. Thomas Cook Group was majorly affected
by the economic condition of UK, during the years (Gaur, Kumar and Singh 2014).
Figure 1: GDP Growth Scenario of UK

5ECONOMIC & FINANCIAL MANAGEMENT
Graph 2: GDP Economic Growth of UK
Micro-Economic Factors
Travel and tourism help in playing vital role in the UK. It is having major impact on
the economy of each other. Further, industry of travel and tourism in 2016 has made total
contribution of approx. 217 billion British pounds to the GDP in UK (Lee 2015). This
industry was having continual growth over the last five years. The performance of the
industry was good, but the Thomas Cook was not performed in line with the industry
(Kamunge, Njeru and Tirimba 2014).