Finance and Funding in the Travel and Tourism Sector Assignment - Carnival Corporation
Added on 2020-10-22
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FINANCE AND FUNDINGIN THE TRAVEL ANDTOURISM SECTOR
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1.1 Significance of costs and volume in financial management of travel and tourismbusinesses...............................................................................................................................1P1.2 Analysing pricing methods used in the travel and tourism sector..................................2P1.3 Factors influencing profit for travel and tourism businesses.........................................3TASK 2............................................................................................................................................4P2.1 Types of management accounting in travel and tourism business.................................4P2.2 Assessment of the use of investment appraisal management accounting information as adecision-making tool..............................................................................................................5TASK 3............................................................................................................................................6P3.1 Interpretation of Ratios...................................................................................................6TASK 4............................................................................................................................................9P4.1 Analysation of sources and distribution of funding for the development of capitalprojects associated with tourism.............................................................................................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONFinance and funding plays a very important role in this economy. The present report isreflecting process of decision making in selecting best out of many options. It is providingattention and time by the business to enable better growth opportunities for organisation andeconomy. It had stated ratio analysis for gaining financial performance of organization withvarious types of investment appraisal techniques. In context of this a travel and tourism companyCarnival Corporation & plc is planning a trip to Las Vegas for one month. According to it cost-profit-volume analysis is done accompanied by appropriate pricing strategies. Appropriatecomparison of travel and Tourism Company is stated in this report. TASK 1P1.1 Significance of costs and volume in financial management of travel and tourism businessesThis is the analysis, in which funding is based on cost and volume in relation withbreakeven point. Various equations are being used to fulfil the purpose of determining this,irrespective of assumptions that are mentioned for finding cost and volume. There are mainlythree types of costs i.e. fixed, direct and indirect cost where sales, fixed and variable costs perunit remains same and constant (Błaszczyk and Orawiec, 2011). In context of travel and tourismsector Cost-volume-profit analysis plays a vital role in enabling organizations to make plans andcontrol the financial matter of firm. Following are three types of costs:Direct Costs: These costs are functions which benefits project of its own specific kind.Direct costs resemble to variable costs and are directly connected to production of output.Indirect Costs: These costs resemble to fixed costs and indirectly accompanies outputand production function. Fixed Costs: These expenses are fixed and do not varies with change in level of outputalso determined as overhead costsThis is carried by various importance which are as follows: It encourages planning and analysing for future in a well manner which is effective inhotel industry like CHTC, prevents losses by implementing and making proper decisions.This is the most effective tool for determining break even points that helps organizationsto access all necessary information (Cui and Ryan, 2011).
Most suitable mix of all the costs is considered to gain effective performance and cost,volume and all other important data is reconsidered to encourage business growth.Tools used in implementing and forming this technique are easy to use as the data couldbe analysed simply by applying formula to derive desired answer.Volume analysis differ from B2B as they are of different types, for the business liketravel and tourism following factors are considered:Break Even Analysis: It is a process of determining the point at which a business will beable to cover its cost spent on expenses (Techniques and Tools to Help You MakeBusiness Decisions, 2018). It is important for travel and tourism business to analysebreak-even point to understand cost covering period.Economies of Scale: These are the gained saving cost with increase in production levelof output. Cost could be saved in travel and tourism industry by using economies ofscale.Diseconomies of Scale: It is a situation at which economies of scale stop functioning forbusiness. This should be analysed by travel and tourism businesses to know aboutbusiness operations.P1.2 Analysing pricing methods used in the travel and tourism sectorThere are various and many options available with organizations for selecting bestpricing methods for their firm. it is done on the basis of three dimensions i.e. demand,competition and cost. Following are some pricing methods: Cost Based Pricing: In this type of pricing method pricing is done by adding some shareof profits into the value of goods to obtain final selling price. It is further classified into 2types i.e. cost-plus and mark-up pricing (Hilton and Platt, 2013). It is also known as(Average Cost) in which a fixed amount of share is added in total value to set marketprice [P=AVC+AVC(M)]. Whereas, mark-up pricing includes addition of fixed share ofcost of goods to price of product.Demand Based Pricing: In this technique value of product is estimated according to thedemand of product in market (Decision Making – Tools, 2018). Both are interrelated;higher market demand higher the prices of goods and vice-versa.
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