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Finance and Funding in Travel Tourism Sector - Assignment

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Added on  2020-12-10

Finance and Funding in Travel Tourism Sector - Assignment

   Added on 2020-12-10

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FINANCE AND FUNDING INTHE TRAVEL AND TOURISMSECTOR
Finance and Funding in Travel Tourism Sector - Assignment_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11.1Costs and volume analysis significance in financial management....................................11.2 Pricing techniques used tourism travel and sector...........................................................41.3 Factor determining profitably in tourism sector...............................................................72.1 Various management accounting information utilize in tour and travel industry............92.2 Use of Management accounting information in major decision making.......................123.1 The Fulham Shore plc's financial statements.................................................................15Liquidity ratio.....................................................................................................................174.1 funding and sourcing of travel and tourism capital project............................................17CONCLUSION..............................................................................................................................21REFERENCES..............................................................................................................................22APPENDIX....................................................................................................................................24Yearly financial statement of Fulham Shore plc's................................................................24
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INTRODUCTIONFinancial management is techniques of arranging, organizing, governing and controlling the financial activities. In this branchof management, manager makes decision to acquiring and best utilization of financial resources. Funding and finance are twoapproaches to gain money in financial management. Finance is process of availing the financial resources for organization frommarket, Where, funding is amount renders by an organization. Tourism industry depend on both option to acquire the financialassistance. For firm's specific capital need, travelers arrange money by their own. But, when is huge amount needed they make effortsfor funding. Present study describes the pricing strategy, cost analysis and management accounting system used in Carnival Corporation &plc's decision making. Report also cover interpretation of The Fulham Shore plc's financial and type of sources and funding use for bigcapital investments. Carnival Corporation plc Is a big name among leading traveling operators. Its net income is 17.5 billion (2017).Restaurants are possessed run by The Fulham Shore plc's. 1.1Costs and volume analysis significance in financial managementCVP is a cost accounting tool which measure impact of different level of cost and volume on business's probability. Itmeasures breakeven point for varies cost and volume. It helps manager to take tactical and short-term decision. This technique givesbest result only when fixed cost of production remains same with different production quantities. Theory has assumptions like changesin expenses are transpired because of increase and decreased level of production. It is pre-assumed that all produced quantity is sold(Schaltegger and Zvezdov, 2015). Price per unit also remain same as well as cost per unit also constant. Contribution margin is the keycalculation done in CVP. Contribution margin is profit amount which is available in hand before deducting the fix cost. CVP use fixed and variable cost both in assumption. According to CVP variable cost remain same for per unit but it getschanges due to level of activity. The more is produces, the more is Variable cost occur. Variable cost also known as direct cost ofproduction like raw material, electricity, wages and supervision charges etc. Fixed cost is continual in nature, which is not affected by1
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production volume. Volume is number of unit produced, when manager know the cost of produce specific unit, then calculated thecost of desired production become easy.Contribution margin= revenue – variable cost Advantage of CVP:CVP help in determining of breakeven point. BEP assist manager in financial and production planning. Manager can makeefforts to increase production and reduce cost in order to maintain the probability (Said, 2016). It renders, close up of different activities like cost and amount of prediction. These snap shots help manager to predict requiredamount of future variable alternative. Performance evaluation and controlling action can be taken on time. Required sale volume can be measure to achieve certain profit margin and amount. 2
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Sources: (Cost Volume Profit (CVP) Analysis,2019)Various taxes can be including in profit chart, which help in calculates incorporate tax for multi fold service and product, LikeCarnival Corporation & plc's earn sales form render accommodation as well as transportation facility given by it to tourism.So, company can easily get the amount which it has to pay as income tax on both revenue by using CVP.CVP provide aid to measure risk associated with cost and volume.Carnival Corporation & plc's enable to practice most suitable and best cost, volume and profit combination (Huang and et.al.,2015). This matching render point of safety, fair pricing, profit maximization and competitive advantage.Manager develop budget for different level of production and select the most money-making product and service.3Illustration 1: CVP graph
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CVP helps in trend analysis by providing changes in production for different period.1.2 Pricing techniques used tourism travel and sector Travel and Tourism industry is one of the most cost sensitive sectors. Its price gets fluctuate because of speedy and frequentchanges in variable cost. Common factor impact service industry pricing are cost, competitor’s strategy, Commissions, judicial factor,demand and supply, currency exchange rate, rack rate, seasonality, degree of marketing efforts, pricing objective, productdifferentiation, firm's and product's like cycle phase, economic condition and Channel intermediaries (Mattila and Gao, 2016).Carnival Corporation and plc has to increase its service price for lastMinute reservation because cost of acquiring service in shorttime span, are generally expensive. Environment factor and consumer behavior also contributes in pricing policy.4
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