Finance and Funding in Travel and Tourism Management

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Added on 2020-11-23

Finance and Funding in Travel and Tourism Management

Added on 2020-11-23

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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3a. Examining the concept of CVP analysis and assessing its importance in financialmanagement.................................................................................................................................3b. Presenting pricing methods which can be used by Akaglo Tours company...........................5TASK 2............................................................................................................................................7a. Explaining different types of management accounting information which can be used byATC.............................................................................................................................................7b. Assessing the use of investment appraisal techniques as a decision making tool...................8TASK 3..........................................................................................................................................10a. Interpreting financial statements of TUI travel through ratio analysis..................................10TASK 4..........................................................................................................................................14a. Assessing funding sources which can be undertaken by the company for developing newhotel...........................................................................................................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16

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INTRODUCTION In the current times, travel and tourism sector is growing with the very high pace. Now,with the motive to make the vacations memorable individuals prefer to contract travel companieswhich in turn provides them with attractive tour packages. In UK, there are several companieswhich involved in planning specific packages as per the wants and expectation of customers. Thepresent report is based on Akaglo Tours Company which is planning to offer excusive summerholiday trips to the customers. In this, report will provide deeper insight about the aspects offinancial management. Besides this, it also depicts the manner through which prices of the travelpackages can be determined by ATC. Report also entails how investment appraisal tools andtechniques aid in decision making aspects. Further, it also highlights the extent to whichprofitability, liquidity and solvency position of the company is good. In this, internal andexternal funding sources will also be described which firm can use for the new establishment. TASK 1a. Examining the concept of CVP analysis and assessing its importance in financial managementIn the context of ATC, cost, volume and profit assessment is highly significant whichmakes vital contribution in the aspect of financial management. Cost: It implies for the sum of expenses incurred by the firm for offering travel packagesto the customers. Hence, ATC can distinguish expenses in terms of fixed, and variable andthereby would become able to determine overall cost level. Fixed cost: Expenses which are not affected from the number of units produced oroffered considered as fixed cost (Bulgurcu, 2012). Main examples of fixed cost in the context ofATC include salaries of personnel etc. Variable cost: Unlike fixed, variable cost affects from the number of units produced orservices offered to the customers. Hence, according to the units variable costs are affected to agreat extent. Variable expenses include insurance, electricity expenses etc. Total cost: Fixed + Variable

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(Source: Variable cost, 2018)Volume: It has assessed from evaluation that volume plays a vital role in financialmanagement. Moreover, when firm offers services to the large number of customers then it getshigh economies of scale (Hall and Page, 2014). In this, by doing BEP analysis, ATC can assessthe number of customers which it needs to serve for attaining the situation of no profit no loss BEP Graph `(Source: Break-even point analysis, 2018) Profit: High volume and low cost positively contributes in the profit margin generatedby the firm. High economies of scale offer cost advantages to the firm and thereby enhancesprofit level. In addition to this, using BEP tool business entity of ATC can identify the number oftourists to whom travel packages need to be offered for getting the desired level of profit margin.

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