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Finance & Funding in the Travel and Tourism Sector

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Added on  2020-06-04

Finance & Funding in the Travel and Tourism Sector

   Added on 2020-06-04

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Finance and Funding in theTravel and Tourism Sector
Finance & Funding in the Travel and Tourism Sector_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Task 1...............................................................................................................................................1P 1.1 Explain the importance of costs and volume in financial management of travel andtourism businesses..................................................................................................................11.3 Analyse factors influencing profit for travel and tourism businesses:.............................3Task 2...............................................................................................................................................5A. Explaining different types of management accounting information that could be used byAkaglo Tours Company(ATC);..............................................................................................5B. Use of investment appraisal techniques in travel and tourism company...........................6Task 3...............................................................................................................................................7A. Interpretation of financial statements covering ratios.......................................................7Task 4...............................................................................................................................................9A. Sources of funding for the business...................................................................................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
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INTRODUCTIONFinance and funding has significant role in the travel and tourism sector in achievingtasks in effective manner. Present report deals with ATC (Akaglo Tours Company) engaged intravel sector and is planning holiday trip to Maldives. Cruise yacht and beach chalets will beprovided and as such, per tourist cost will be clarified. Moreover, importance of CVP analysis,pricing methods are provided which will help company in estimating price. Managementaccounting information is also important for taking effective decisions. Use of capital investmenttechniques are also listed assisting in decision-making. Financial ratios are also computed forThomas Cook Group Plc. Furthermore, sources of funding are also listed in this report. Task 1P 1.1 Explain the importance of costs and volume in financial management of travel and tourismbusinessesFinancial management is crucial aspect of each business effectively and organisationalprofessionals need to ensure that, all financial activities is being managed within the business inmore effective manner. So there are some appropriate aspects of businesses described as below: Importance of costs:There are several costs is existed in Akaglo Tour Company in order to operating of theirbusiness functions in proper format:Direct costs: this is the price in business which is directly associated to the costing ofeach production of particular products and services effectively. In case of ATC organisation,they also have some specific direct costing occur at the workplace in order provision of their tourand travelling services in the industry in efficient form (Bellavitis and et.al, 2017). There aresome direct costs concerned to the business which is depreciation costs, administrationdisbursals, insurance costing, interest and all other utilities which is using in furnishing travellingfacilities to their client in effective form. These costs are must be managed by finance managerof the company in respect to reduce expensed for the business.Variable costs: Variable costs are those costs which is associated with each productionand service providing business in more effective form. It's frequently changes as per the changedin the proportion of outputs. As its shows from its name, variable 1
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Fixed costs: Fixed costs are those cost that does not change with an increase or decreasewith the production of goods and service produced by the company.Indirect costs: Indirect costs are those cost which are not directly linked or associatedwith cost of production. For example general and administration expenses.Profit: For Betterment of the profit the Akaglo Tours Company needs to identify thesales changes in changes of sales directly impact on company gross profit. There are severalfactors which are directly impacted on sales (Gurtner, 2016). For example internal and externalfactors of the company to reduce the impact of that factor Akaglo Tours Company can useseveral methods like SWOT analysis and PESTLE analysis.Cost volume: The cost volume defines that reports a breakdown of costing in order togetting more relevant issues related to costing in the business. It has been seen that, costingvolume assessment is most necessary things for Akaglo Tours Company organisation in order toestimation proper costing of the company in industry.Profit analysis: Profit assessment is one of the most factor for Akaglo Tours Company inorder to analyse profitability of the business in order to examine proper profitability of theorganisation in travelling company.\In the context of ATC, CVP analysis is highly effectual which helps in reducing cost andthereby maximizes profit. Moreover, when firm offers products or services to the large numberof customers then it attains high economies of scale. Along with this, fixed cost also decreaseswhen travel firm offers tour packages to more customers. Hence, it can be presented from theevaluation that CVP analysis is highly effectual and helps in doing effectual financial planning.P.1.2 analyse pricing methods used in the travel and tourism sector:Pricing methods are the monitoring tools which can calculated the price of goods andservices by considering all factors (Internal and External). Akaglo Tours Company needs toidentify which pricing strategies are useful for firm vision expansion and their objectives.The real meaning of price to be tourist can be context by actual charges of accommodationfacilities cost. For Akaglo Tours Company there are some recommendations pricing strategies :1. Cost Plus Pricing: Cost plus pricing based on the cost for example direct materialcost, direct labour cost and overhead cost. Akaglo Tours Company takes advantages of this2
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