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Finance & Funding in Travel and Tourism Sector Assignment - Eurocarib tours

Added on - 23 Nov 2020

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FINANCE AND FUNDING INTRAVEL AND TOURISMSECTOR
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A. Examining concept of CVP analysis along with its importance in financial management ofEUROCARIB..............................................................................................................................1D1.................................................................................................................................................2B. Analysing pricing methods used for identifying price to charge every tourist.......................3C. Analysing factors which influence profit of Eurocarib would earn on holiday trip...............4TASK 2............................................................................................................................................4A. Explaining various types of management accounting information used in Eurocarib...........4B. Assessing application of investment appraisal techniques as tool of decision making..........6TASK 3............................................................................................................................................9A. Interpreting financial statements with application of profitability, investment and liquidity.9TASK 4..........................................................................................................................................12A. Analysing sources and funding distribution of funding........................................................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONFinance is considered as process of getting money or capital with objective of businessand usually it is given through various financial institutions such as banks and other agency oflending. Funding is actual money given through organization or through government sector withspecific objective. The present report will give brief discussion about finance and funding insector of travel and tourism with reference to Eurocarib tours. This is London based Europeantour operator which is focussing on Caribbean holidays. This report would be signifying conceptof CVP analysis along with various methods of pricing. It will represent factors which influencesthe margin of Eurocarib business. Further, it will articulate about various types of managementaccounting information and application of investment appraisal techniques. In the similar aspect,it will interpret financial statements and analysing various sources of finance.TASK 1A. Examining concept of CVP analysis along with its importance in financial management ofEUROCARIBCost volume profit analysis is referred as cost accounting method which observes impactwhich varies level of volume and cost of operating profit. It studies interrelationship among cost,price, volume and profit as it is contribution of marginal costing. It identifies alterations involume and cost impact on their net income and operating expenses. With breakdown of cost infixed and variable, CVP analysis provides organization as strong insight about products andservice's profitability. Eurocarib uses CVP analysis for making various information related toservices and products which are sold. In the similar aspect, it plays huge role in managerialaccounting as it highly focus on helping managers and task while operating business whichmakes cost effective and smart moves. However, financial accounting lays special emphasis onframing company's economic picture to outside parties like investors, banks and customer and toidentify its financial health (Camilleri, 2018).It considers three elements such as cost, volume and profit where cost is expensesengaged in producing or selling product or service. Volume is replicated by produced number ofunits in physical product along with amount of sold service. Further, profit is replicated asvariation among product's selling price minus produced cost for giving it. CVP analysis helps inproviding overview of planning process of margin. It helps for evaluating reasonableness andpurpose of these forecasts and budgets and essential for profit and budget planning. It identifies1
maximum volume of sales for avoiding losses where objective of profit could be attained. Thisanalysis forecast and evaluate implications of short term decisions of Eurocarib on basis ofmarginal and fixed cost, selling price and volume of sales for planning about profit oncontinuous aspect.Graphical presentation of CVPX axis: Number of unitsY axis: Cost in poundsD1ParticularsFigures (in £)Fixed cost120000Desired profit margin30000Selling price per unit1250Variable cost per unit400Contribution850Break even (Fixed cost/ contribution)141.17Number of tourists need to be served for gettingdesired profit margin(120000 + 30000) / 850= 1762
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