Finance and Funding in Travel and Tourism Assignment - EUROCARIB
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Added on 2020-10-23
Finance and Funding in Travel and Tourism Assignment - EUROCARIB
Added on 2020-10-23
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FINANCE AND FUNDINGIN TRAVEL ANDTOURISM
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1 ...........................................................................................................................................1A. Concept of CVP analysis and its importance in financial management.................................1B. Analysis of different pricing methods used by EUROCARIB to determine the price ..........2C. Factors affecting profitability of EUROCARIB.....................................................................3TASK 2............................................................................................................................................4A. Different types of management accounting techniques can be used in EUROCARIB.........4B. Use of investments appraisal techniques as a decision – making tool....................................5TASK 3............................................................................................................................................8A. Financial statement of Thomas cook and interpretation of financial statement with the helpof profitability, liquidity and investment ratios...........................................................................8TASK 4..........................................................................................................................................13A. Sources of funding available for Eurocarib for development of new hotel..........................13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONFunding is the activity of giving financial resources normally in the kind of currency toother values such as efforts or time, to finance want programs and project. On other hand,finance is an amount of total of money given to company with outlook to repay and firm is liableto pay back capital amount along with certain percent of interest(Odden and Picus, 2018). Thisstudy is based on EUROCARIB tour operators. It is major London-based European touroperators. This report will explain CVP analysis and its importance in financial management aswell as different pricing methods. It will analysis different factors that influences on profits ofcompany. It will explain various kinds of management accounting information. Furthermore,report will assess utilize of investment appraisal techniques and different source as well asdistribution of funding the company. It will interpret ration for probability, liquidity andinvestment of particular company. TASK 1 A. Concept of CVP analysis and its importance in financial managementCost Volume Profit Analysis(CVP):CVP analysis is kind of cost accounting. It is easy model that helpful for elementarydirection and for short run judgements. It is planning procedure that management utilize toanticipate future of volume of action, incurred costs and sales mode as well as profits received.There are different elements includes such as level or volume of action, selling price of unit,variable cost per unit, total fixed costs, direct and indirect workforce(Sclar, Lönnroth andWolmar, 2016). This analysis is categorised that is fixed and variable costs. Fixed costs areexpenditure that don't fluctuate directly with volume of unit manufactured. The fixed costbecome smaller percentage of total income while variable cost remain constant percentage asincreased production level. Break even point refers to the point at which the firm have no profitno loss at this stage the Eurocarib recover its cost of the product and services. Variable cost isthe cost which changes with change in the volume but fixed cost are the cost which remainconstant over the period and does not change with change in the level of volume. Semi – variablecost are those cost which have posses characteristics of both fixed and variable cost once aspecific level of output surpassed.D1 :Particulars Figures (in £)1
Selling price per tourist1600Variable cost per tourist400Contribution (per tourist)1200Fixed cost 120000BEP (in numbers)Fixed cost / contribution pertourist 100BEP (in value)BEP (in numbers) * SP pertourist 100 * 1600 = 160000Tour packages need to beoffered while company wantsto get £30000Fixed cost + desired profit /contribution per tourist120000 + 30000 / 1200 = 125Importance of CVP analysis: CVP analysis is important for researching relationship between volume, cost and profits.It gives an overview of process of planning profits. It is also assists to analysis the objective andrationality of such budget and forecasts. There are many ways that CVP analysis is very essentialfor financial management in the EUROCARIB. Such as:2Illustration 1: CVP analysis(Source :Cost Volume Profit (CVP) Analysis, 2018)
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