# Estimating Uncertain Events in the Past: A Mathematical Technique

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Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018Name: Student Number: Word count: Name of the course: Tutor name: Date of the assignment:“FINANCEAND FUNDINGINTHE TRAVELAND TOURISM SECTOR(A Case Study on Miramar Hotel and Investment, Hong Kong)TABLEOF CONTENTS1 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018Introduction........................................................................................................................................4Question 1 (A) Define various levels of ‘profit’ and explain the usefulness of profit measurementto the management of Miramar Hotel and Investment, Hong Kong..................................................4Question 1(B)Define and discuss the association between items (i) and (ii) below and theprofitability of Miramar Group, Hong Kong.....................................................................................6I)Quality II) Efficiency.................................................................................................................61.(C) Cost plus pricing methods and its usability by Miramar group...........................................82.(A) Budgeting and some tools of budgeting:.............................................................................92(B) Usefulness of budgeting..........................................................................................................103. (A) (i) Impact of Hong Kong Government / Government Agencies and the local or internationaltourism non-governmental organizations (NGOs) in case of capital project decision of MiramarGroup...............................................................................................................................................113 (A) (ii) Impact on routine operations of Miramar Group by Hong Kong Government /Government Agencies and the local or international tourism non-governmental organizations(NGOs).............................................................................................................................................124 (A) (i) Product and period costs....................................................................................................144 (a) (ii) variable cost and fixed costs..............................................................................................144 (B) (i) Breakeven level of sales.....................................................................................................154(B) (ii) the breakeven level of sales if the Restaurant wants to earn 12% on the \$320,000investment........................................................................................................................................164 (C) (i) Expenses Calculation.........................................................................................................164 (C) (ii) Income Statement for Sunderland Restaurant..................................................................164 (C) (iii) Balance sheet...................................................................................................................174 (D) Benefits of using ratios in the financial management........................................................184(E) (i) Variance analysis............................................................................................................194 (E) (ii) Trend analysis and comparison.....................................................................................20Reference List..................................................................................................................................21Appendices.......................................................................................................................................23Appendix 1...................................................................................................................................232 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018Appendix 2...................................................................................................................................363 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018INTRODUCTIONThis study focuses on the funding as well as the financial condition of Miramar Hotel andInvestment at Hong Kong as part of the Travel and Tourism Sector. The report consists of allabout four sections. In this study, there is a brief discussion on the profit measurement of MiramarHotel and Investment in Hong Kong. Together with this there is a discussion on the quality,efficiency as well as profitability with some real time examples. Thereby, Miramar Hotel in Hong Kong is chosen for this assignment as it has a large number ofstylish room capacities along with their other services pertaining to travel and tourism sector. ThisGroup can be viewed under the list of companies of Hong Kong Stock Exchange since the year1970. They are belongs to the member of Henderson Land Group. The average occupancy rate ofthis hotel is found as the higher rate as 90% in year recent year of 2017. Hong Kong is considered as one of the most globalized cities in all over the world. Miramar Hoteland Investment Company, limited is thus established in the year 1957 in Hong Kong. Theportfolio of its business is very interesting and provides the services from stylish hotel to food aswell as travel services in Hong Kong along with Mainland China. The profit has been calculatedbased on the overall revenue and it comes HK\$ 792,055, 000 in 2017, as per the interim report of30th June in 2017. The overall profit for the company was HK\$ 641,373, 000 in the year 2016 andthus it has been seen that almost HK\$ 50,000,000 profit has been made within the six months ofperiod by this business group. For this huge profit, company can declare the interim dividend HK\$142,243,000 which is more than the dividend that declared in the year 2016 is almost HK\$115,500,000 [ CITATION Mir17 \l 16393 ].The Miramar Group has completed the financial year 2016, by the acquisition of another group,called HYFCO Travel Agency Limited in the year 2016 and from that the revenue thus added upby HK\$ 23 million. Through this acquisition as well the profit of the Group can be measured(Nasdaq, Inc., 2016).QUESTION 1 (A) DEFINEVARIOUSLEVELSOFPROFITANDEXPLAINTHEUSEFULNESSOFPROFITMEASUREMENTTOTHEMANAGEMENTOFMIRAMAR HOTELAND INVESTMENT, HONG KONG.From the consolidated statement of the Profit and Loss the following levels are found on behalf ofthe Miramar Group:4 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018a)Gross Profit: It is the difference of the revenues and other direct manufacturing expenses.In case of Miramar Group, the Gross profit is HK\$1,135,375 in the year 2017. This profitindicates the total generated profit from sales from which the cost of goods sold issubtracted and thus it is extremely important for the business that it will provide an insightabout the primary profits as it will generate from the sale as well as the manufacture orpurchase and the direct expenses for the business. Thereby, the gross profit margin can beobtained from the gross profit dividing by the net sales [ CITATION Son10 \l 1033 ].b)Operating profit: Operating income or the profit before the Interest and Taxes (PBIT) means the Gross Profitadding with other operating incomes whereby all the other expenses and other marketingand administrative costs are lessen.*all the amount is in HK\$Gross Profit in 20171135375Add: other Income87340Less: other Expenses199878Less: Marketing Cost220399Add: Administrative and maintenance cost516397PBIT286041Also from the operating profit it can be noticed that the pre-tax profit generated from theoperations itself. This is very significant as it determines the overall financial health for thecompany and that is very vital as per the profit generated from the core business of thecompany. It is also checked that the operating margins are said to be decreased so that itmay indicate the earning signs. If the company hold very large amount of asset at thedisposal which it can be sell and thus generated the revenue. These will thus depending onthe operating profits and thus it will generate the revenue. This has to depend on theoperating profits only [ CITATION Acc18 \l 1033 ].c)Profit Before Taxation (PBT)This is the profit before considering the taxation processes.For Miramar Group, the PBT in 2017 is KH\$ 1686210 as compared to the PBT in 2016 asHK\$ 1087916. Thus the profit before taxes has indicated the amount of the revenue asgenerated from the operations after the meeting of all the expenses which includes thefinance cost along with the amount only for the taxes as it is needed to be paid for arrivingat the net profits.Gross Profit in 201711353755 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018Add: other Income87340Less: other Expenses199878Less: Depreciation113614Add: Finance Costs909223Add: Non-operating net gain900999PBT1686210d)Profit for the year attributable for the shareholders of the companyThus the net income as available for the shareholder of the company after subtracting allother expenses, the net profit for 2017 became HK\$ 1543328 as compared to the amountof \$1307894 of the year 2016. From the value of the net profit it can be noticed that theamount available to the shareholders after their meeting and thereby the profit of MiramarGroup is increased by 18% compared to the previous year. For this amount of profit thereis the dividend of 59 cents per share at the year ended of 31st March 2017-2018.So as to comparing within the different profit margins with the peers and other industry standardsit will highlights the insight about the performance of the business and their efficiency as well inoperation. Thus it will help in the case of streaming of various activities with which the business isfound to be engaged. There is the other function which is said to be more important tool for theinvestors along with the other stakeholders in order to make the investing as with the businessdecisions.These profits have the certain limitation which has accounted for the accrual basis accounting andthus it would not cash basis. Thus the money due from the debtors as recorded is the income andtheir creditors due to the expenses. In these times they may not indicate the correct financialposition for the business. The business sometimes may face the issue of overcharging to thecustomers and the unfair treatment towards their employers [ CITATION Nas16 \l 1033 ].QUESTION 1(B)DEFINEANDDISCUSSTHEASSOCIATIONBETWEENITEMS (I) AND (II) BELOWANDTHEPROFITABILITYOF MIRAMARGROUP, HONG KONGI)QUALITY II) EFFICIENCYAccording to some recent studies the customer has the power to consider the quality services asper the value of the money, his comfort level within the hotel room, courteous staff along withquality food. Thus the quality improvement focusses upon the excellent services, the retaining ofthe existing customers through providing them the quality services so that it will exceed the6 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018expectations and the constant training for the service-oriented employees. The employment is thebest quality practices and that will get the quality accreditation as per the ISO or the EuroFoundation for the Quality Management and as per the standard eco labels.On the other hand the efficiency for the hotel performance indicates the decreased in costs alongwith the optimal utilization for the resources for both the material as well as the human resources.It is the quality which is in turn a basic factor for the efficiency along with the competitivenesswithin the tourism market. The consumers in that case normally do not tolerate the mistakes withany more. They want the quality for their money [ CITATION Edi10 \l 1033 ].As the quality of the products as well as the services can be improved the level of customersatisfaction will enhance and he becomes more loyal. Thus, the enterprise has the competitive innature which leads to the reduction in the costs along with the improvement performance as wellas the enhanced value of the business.In the case of Miramar groups, as they are belong to the hospitality industry, through which themain focusses on the people is both the labor as well as the capital intensive. In this business theycan deliver the good services towards the customers and thus they maintain the facilities for propercondition. As they want to generate a good revenue.The group is awarded with the “Top Green Companies in Asia” for its excellent performance inthe Power Smart Energy Saving Context. This indicates that for Miramar group “Green Concept”is the role model and that is the excellent property as well [ CITATION Hal10 \l 1033 ].Profitability ratio for Miramar Group of Hotel, 20177 | P a g e
Running Head: Finance and Funding in the Travel and Tourism Sector-Miramar GroupJune 5, 2018Source [ CITATION Mir17 \l 16393 ]From the above chart, it can be observed that there is a high rate of return in any aspect for thisHotel. Through the analysis if profit margin for Miramar Group has been increased graduallyincreases. The higher the ratio, it is better in quality purpose as well [ CITATION Son10 \l16393 ]. From the above figure, it is clearly mentioned that under profitability ratio, the grossmargin is near about 30.92 which is quite high and it is also showing the improvement comparedwith the year 2016.Also from the efficiency ratio, it can be observed that there is positive asset return for every year.For the purpose of cope up with the challenges through the external environment, management hasadopted several measures. Such as, to improve the operational efficiency as well as to strengthenthe risk management, Miramar group has vigorously strived for enhancing the value of theoperations includes the process of optimization in tenant mix. It helps to improve the service8 | P a g e

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