Financial Decision Making for Travel and Tourism in Thomas Cook Group : Report

Added on - 22 Jul 2020

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Financial decision making fortravel and tourism
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Sources of finance in the travel and tourism sector............................................................12. Discussing behaviour of costs and significance of CVP (Cost Volume and Profit)..........33. Discussing pricing strategies in travel sector.....................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................7
INTRODUCTIONFinancial decisions are required to be made in order to extract benefits quite effectively.Present report deals with Thomas Cook Group Plc which is British corporation engaged in traveland tourism sector and able to satisfy customers with much ease. Organisation is planning forexpansion to other market that is not explored by it. Moreover, report focuses on various sourcesof finance available to company and various pricing strategies that can be selected byorganisation which suits the most. Furthermore, report highlights CVP analysis and costbehaviour with relevant graphs and examples. Thus, importance of financial decision is muchrelevant to company in attaining objectives in effectual manner.1. Sources of finance in the travel and tourism sectorThere are various sources of finance available to company by which it can expand itsoperations in the best possible manner. Thomas Cook Group Plc is one of the successful traveland tourism company situated in UK. In very short time span, organisation has garnered goodquantum of profits and is able to satisfy customers in effective way. Various sources of financecan help company to expand its reach to more markets that are not been explored by it. Forexpansion, it requires finance from different sources in order to attain its objectives quite easily.There are internal and external sources which are explained below-Internal Sources1. Retained EarningsThis is quite useful source of finance for Thomas Cook Group Plc to arrange fundsinternally (Internal Sources of Finance). Retained earnings are also known as ploughing back ofprofits for the main reason that whatever amount of profits are generated in the last year areretained in the business for future course of action. It is retained in smaller amount as majorearnings are provided to shareholders in the form of dividend. Thus, organisation may easily usethis source of finance for expansion purpose in effectual way.2. Sale of AssetsThis is another major source by selling off fixed assets of organisation for generatingfunds quite easily. Thomas Cook Plc can sell its assets so that it may be able to produce goodquantum of finance in the best possible way. When business sell fixed type of assets, cash is1
generated that is used for attaining capital requirements for internal purpose with much ease.This is one of the advantageous source of finance as when assets become old or obsolete and nolonger available for use, then it is better to dispose it off and cash can be easily produced and assuch, organisation may raise funds in effective manner.External Sources1. Borrowings from bankBank loan is one of the common source of finance which can be used by the company forraising finance in the best possible manner (Ormond and Sulianti, 2017). Banks usually chargescertain rate of interest that is to be paid along with principal amount. In simple words, principalamount is paid with interest accrued on the same and as such, timely instalments can be paid.Thomas Cook Plc may take loan as its solvency position is good enough that means that it maybe able to repay loan amount within stipulated time with much ease. Borrowings from bank isgood source of raising funds and organisation may take advantage of it for meeting capitalrequirements quite effectually2. Share capitalShare capital is another source of raising funds for expansion purpose. Shareholders arethe people who invests in the company and as such, Thomas Cook Group Plc can take advantageof such source of finance with much ease. This is quite essential for company so that it may beable to garner funds required for expanding its operations in another market and as a result,capital requirements can be met in the best possible manner. It is quite easy external source offinance and organisation may take benefit out of the same (Kransdorff, 2017).3. Angel investorsAngel investors are another source of external source of finance. These investors providefunds to company in generally less amount that are sufficient for the organisation to meet itsrequirements in effective manner. Investors provide funds for company so that it may attainfinance for carrying out activities quite effectually. Moreover, apart from providing funds, theyalso give suggestions and advice to company for easing complex tasks in the best possiblemanner.2
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