Finance And Funding In Travel And Tourism | Assignment
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Added on 2021-02-16
Finance And Funding In Travel And Tourism | Assignment
Added on 2021-02-16
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Finance And Funding InTravel And Tourism
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1. Concept of CVP analysis and its importance in the financial management ofEUROCARIB .............................................................................................................................11.2. Analysis of pricing methods that EUROCARIB can use to determine the price:.............3D1. Desire profit..........................................................................................................................5TASK 2............................................................................................................................................52.1 Different types of management accounting information that could be used inEUROCARIB..............................................................................................................................5M2. Variance analysis helps in improving the performance of company: ................................62.2 Investment appraisal techniques as decision making tools: .................................................7TASK 3............................................................................................................................................93.1. Financial statement of travel and tourism company............................................................9M3. Appropriate Management Approaches..............................................................................10D2. Collect and analyse the company financial statements......................................................10D3. Concluding whether the company is financially stable in the long term on the basis ofratios..........................................................................................................................................10TASK 4..........................................................................................................................................114.1 Different sources and distribution of funding for development of new hotel ....................11CONCLUSION .............................................................................................................................12REFERENCES................................................................................................................................1APPENDIX......................................................................................................................................2
INTRODUCTIONFinance is defined as the management of money and includes activities like investing,borrowing, lending, budgeting, saving and forecasting. There are various sources available forthe firm that assist in getting adequate or sufficient level of finance for long term as well as shortterm (Byrne, Sipe and Dodson, 2014). Finance is also important and necessary for tourismindustry in order to gain knowledge and information of the different concepts related to thefinancial performance or condition of the business. Main purpose of this report is to identifyingthe significance of finance and funding in travel and tourism organisation. In this report, givenorganisation is “EUROCARIB TOURS” which is a major European tour operator in Londonand focusing on Caribbean holidays. This study is divided into different parts which includesimportance of costs, volume and profit and use of management accounting information in traveland tourism. This assignment is also cover financial statement of the tourism company anddifferent sources of new hotel development (Kurowski, 2014). TASK 11.1. Concept of CVP analysis and its importance in the financial management of EUROCARIB Concept of CVP:Cost-profit-Volume analysis get applied for the motive of determining variation in costsand volume that impact on operating income and profit of EUROCARIB. There are fewassumptions made within this procedure such sales price per unit is constant. In addition, it is aneffective planning tool which is used by the management in order to predict future volume ofactivity, sales made, costs incurred and profit received. Through cost volume analyse, break evenpoint for different sales volumes and cost structures is analyse which can be useful forEUROCARIB for making taking short- term economic decisions.Importance of CVP:CVP plays an important role to make financial decision for an organisation. CVP helps toknow the variables in cost and volume and its affects in operating expenses and net income. CVPanalyses help to know the relation between cost, sales and price. Financial management is aprocess which involve planning, organising, controlling and monitoring financial resources forthe achievement of organisational goal (Chen and et. al., 2014.). CVP analyse is important in thefinancial management of EUROCARIB because of the following reasons like- it helps to know1
the cost or expenses which occurred in the whole tour. It helps to know the volume, for a touroperating company it is important to know the expenses involve in services which are providedto tourist. By analyse the cost and volume EUROCARIB can take financial decision. CVPanalysis determines the how much changes in company's cost both fixed and variable, salesvolume and price affect a company's profit. Through CVP Analyses EUROCARIB can know itsfixed and variable cost. It these costs will incur more then profit margin will be less so companytries to minimise these costs. There are following ways to minimise the cost like- be smart whenit comes to fuel means airlines can save money by fuel hedging contracts that secure a fixedprice for fuel over a specific period of time. If an airline has hedged a low fuel prices and whenfuel prices will increase they can get benefited greatly from being locked into the lower price,sometimes for months or even quarters, consequently saving huge amount of fund. It shows theeffective financial management decision of the company because EUROCARIB is able tominimise its fuel price and through it they can earn more profit or profit margin will increase.BEVSales 800000Fixed cost 120000Contribution 600000BEP0.2Sales Contribution BEP0100000200000300000400000500000600000700000800000900000BEP Analysis Column H Column H2
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