Finance and Funding in Travel and Tourism Sector : Assignment
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Added on 2020-01-21
Finance and Funding in Travel and Tourism Sector : Assignment
Added on 2020-01-21
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Finance and Funding in the Travel and Tourism Sector1
Table of ContentsINTRODUCTION ...............................................................................................................................4TASK 1.................................................................................................................................................41.1 Importance of CVP Analysis.....................................................................................................4CVP Anlysis : .........................................................................................................................4Importance of CVP anlaysis in Tourism Industry...................................................................51.2 Analysis of Pricing methods for Travel and Tourism Sector.....................................................5Competitive pricing policy .....................................................................................................5Geographical Pricing ..............................................................................................................5Cost plus Margin ....................................................................................................................6Penetration Pricing Policy ......................................................................................................61.3 Factors influencing Profits for Travel and Tourism...................................................................6TASK 2 ................................................................................................................................................72.1 Types Of Management Accounting Information applied in Decision Making..........................7Budgeting ...............................................................................................................................7Cost accounting and Variance analysis .................................................................................8Ratio Analysis ........................................................................................................................82.2 Use of investment Appraisal Techniques in decision making...................................................8Payback Period........................................................................................................................8Accounting rate of return (ARR)............................................................................................9Net Present Value (NPV).........................................................................................................9Internal Rate of Return (IRR)................................................................................................10TASK 3 ..............................................................................................................................................103.1 Interpretation of Financial Statements of Thomas Cook Group PLC......................................10Profitability Ratios................................................................................................................10Liquidity Ratios.....................................................................................................................11Investment Ratios.................................................................................................................12TASK 4...............................................................................................................................................134.1 Sources of Finance for Tourism Industry.................................................................................13Internal Source......................................................................................................................14External Sources ...................................................................................................................14CONCLUSION .................................................................................................................................15REFERENCES...................................................................................................................................17Index of TablesTable 1: Cost Volume Profit analysis for CHTC..................................................................................5Table 2: Factors influencing the profits................................................................................................6Table 3: Calculation for profits when 90 tourist registers....................................................................7Table 4: Calculation of Payback Period...............................................................................................8Table 5: Calculation of ARR................................................................................................................9Table 6: Calculation of NPV................................................................................................................9Table 7: Calculation of IRR................................................................................................................10Table 8: Ratio analysis on the basis of Profitability ratios of Thomas Cook Group PLC..................102
Table 9: Ratio analysis on the basis of Liquidity ratios of Thomas Cook Group PLC......................11Table 10: Ratio analysis on the basis of Investment ratios of Thomas Cook Group PLC.................12Table 11: Analysis of Internal Sources of Finance.............................................................................14Table 12: Analysis of External Sources of Finance............................................................................14Illustration IndexIllustration 1: Cost Volume Profit (CVP) analysis ..............................................................................4Illustration 2: Management Accounting information functions...........................................................7Illustration 3: Profitability ratios of Thomas Cook Group PLC.........................................................11Illustration 4: Liquidity ratios of Thomas Cook Group PLC.............................................................12Illustration 5: Investment ratios of Thomas Cook Group PLC..........................................................133
INTRODUCTION Finance is a pillar of success and growth for business in every sector and Travel and tourismis no exception. Carib Happy Tours Company(CHTC) is a company engaged in arranging toursacross the globe. This report reflects the application of CVP analysis and its importance in additionto evaluation of factors influencing profits of the CHTC. Although management decisions are basedon the intuitions and market conditions but information regarding management accounting playsvital role in the same. Further this report displays investment appraisal techniques and its use indecision making. Moreover Thomas Cook Group PLC is selected for performance measurementunder the financial microscope. Finance being major function, this report described the sources offinance available for the expansion projects of travel and tourism companies. TASK 11.1 Importance of CVP AnalysisCVP Anlysis : CVP analysis depicts the relationship between cost , volume and profits of the organisation.It describes various levels of operation which will generate profits or loss for the enterprise. CHTCwith the help of CVP analysis can determine the break even number of customers to be taken on tripto land into situation of no profit and no loss. Break even point is the level of sales where companyis at indifferent situation and anything above break even will result in profits and below the samewill be loss(Kumar, 2016).4Illustration 1: Cost Volume Profit (CVP) analysis (Source: Cost Volume Profit (CVP) analysis, 2017.)
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