Financial Analysis of Merlin Plc
Added on 2020-06-05
11 Pages3058 Words416 Views
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Finance and Funding in the Travel andTourism Sector
TABLE OF CONTENTSIntroduction......................................................................................................................................1Task 1...............................................................................................................................................11.1 Significance of costing and volume in financial management of the organization..........11.2 Pricing method applied in organization............................................................................21.3 Factors influence profitability in Marline Entertainment plc...........................................4Task 2...............................................................................................................................................5Task 3...............................................................................................................................................53.1 Financial ratio of The Restaurant Group (TRG)..............................................................5TASK 4............................................................................................................................................74.1 Source of finance which are available with Merlin Entertainment Plc to raise fund forbusiness projects.....................................................................................................................7Conclusion.......................................................................................................................................7References........................................................................................................................................9
IntroductionFinance and funding is most important part of business unit. Funding supports anorganisation in completing their operations in effective manner and generating profit. Presentstudy is based on Merlin Entertainment plc which is operating its business in the entertainmentfield (Arabska and Terziev, 2015). It has branches in approx. 23 countries worldwide. Currentassignment will discuss significance of cost and volume in management of financial activities.Pricing methods implement by the Merlin entertainment will be discussed in this report.Furthermore, study will describe various factors which impact on profit of travel and tourismbusiness. In addition, report will define various types of management accounting information andits uses in decision making process. Study will illustrate financial accounts of The restaurantgroup. At the end of report sources and distribution of funding in the Merlin entertainment willbe discussed.Task 11.1 Significance of costing and volume in financial management of the organizationCost and volume are two essential elements or the firm. Cost plays significant role in thesuccess of business. Travel and tourism organizations have to spend some amount for runningtheir business smoothly (Bao, 2014). This investment is done to provide quality services toconsumers so that they feel satisfied. The main aim of Merlin Entertainment plc is to generatehigh revenues and control over unnecessary expenditures. Needs of tourists can get changed anytime. As cited firm offer variety of services to different types of visitors. In such condition it hasto make changes in its services which can help in meeting needs of users. CPV is the costvolume analysis method which helps the entity in understanding relationship betweenexpenditure made by the firm and generated profit. Both these have strong relationship with eachothers, if Merlin Entertainment plc is spending huge amount in its operations then its profit mayget reduced to great extent (Bhat, Bhatta and Shumais, 2014). On other hand if it makes effectivecontrol over its spending then it will support the firm in generating high revenues. Break even analysis, cost volume analysis are several methods which supports inanalysing cost and volume of the entity. With the help of CPV analysis companies can gaininformation its internal position. Different types of cost are as following:1
Fixed cost: Merlin Entertainment plc has to spend money for paying salaried to staffmembers, utility bills etc. these are fixed cost which are necessary to do by the firm. It isthe responsibility of financial manger that to monitor different expenditures properly sothat it can reduce unnecessary expenses (Divisekera, 2016). By this way MerlinEntertainment plc will be able to generate high profit. Manager of the entity has toprovide salaried to staff members on time so that they feel satisfied and perform theirduties well. Manager of the company needs to make budget and accordingly have tospend in this activity so that operations can be completed within specified budget.Variable cost: It is another type cost which includes activities such as tax, transportationetc. This type of expenses are depended upon the production of the company. Ifproduction is high then variable cost will get increased. Cited firm have to analysis andmonitor activities properly so that Merlin Entertainment plc can generate high profit (Sinand Minca, 2014). Break even analysis is the great tool through which company can do cost volume analysis sineffective manner. This tool will be beneficial for the Merlin Entertainment plc because by thisway corporation will be able to get relevant information about this expenditure and cash inflow.This will support in making sound decision for increasing profitability of the cited firm. CPVanalysis will be beneficial for Merlin Entertainment plc in planning activities properly andmaking good budget. This will support an entity in identifying its capabilities of attracting newconsumers and satisfying them (Stauvermann and Kumar, 2017). 1.2 Pricing method applied in organizationTravel and tourism sector is performing well and it is the main industry that support inincreasing foreign currency in the organization. Marline Entertainment is working in the entertainment industry, it has to provide accommodationservices to its consumers. It is for gaining success in the market it is essential to attract morepeople towards the brand. For that cited firm need to adopt effective pricing strategy that canassist in meeting needs of clients (Whitford and Ruhanen, 2016). There are various pricingmethods which are implemented in entity are as following:Cost plus pricingIt is considered as one of the most effective pricing strategy. It is the tool in whichcompany has to add all cost and according to this individual has to decide pricing. By this way2
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