Report on Thomas Cook of UK

Added on -2020-02-14

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Finance and Funding in Travel 1
EXECUTIVE SUMMARY In the present scenario, travel and tourism sector is growing with very high pace. Hence,business unit can achieve success by offering the innovative services to their customers. The samecan be achieved by the firm only when it manages the financial resources in the best possiblemanner. For this assignment Thomas Cook has been selected which is one of leading tour companyof UK. It can be summarized from the report that by making analysis of the cost and volume aspect,business unit can take suitable decision about the production and price aspect. Further, it can bestated that management accounting information provides high level of assistance to the firm bymaking suitable decisions which will aid in its productivity and profitability. Along with this, it canbe inferred that in the accounting year 2014 and 2015 financial health and performance of ThomasCook was not sound. Thus, it needs to undertake effective action for making improvement in itsfinancial aspects. 2
TABLE OF CONTENTSINTRODUCTION................................................................................................................................3Main body.............................................................................................................................................3Explaining the importance of costs and volume in the financial management of the travel & tourism sector...................................................................................................................................3Analyzing the pricing methods that are undertaken by the travel and tourism sector....................3Assessing the factors that influences the profit margin of travel and tourism sector......................4Explaining the types of the management accounting information that can be used by the firms operated in the field of travel & tourism .........................................................................................5Assessing the use of management accounting information in the decision making aspect ............5Interpreting the financial statements of Thomas Cook for making effectual decisions ..................5Analyzing the sources that can be undertaken by Thomas cook for funding the capital projects .7CONCLUSION ...................................................................................................................................8RECOMMENDATIONS......................................................................................................................9REFERENCES...................................................................................................................................103
INTRODUCTIONFinance is the crucial element which closely influences growth and development of thecompanies operating in the travel & industry. Moreover, now needs, taste and preferences of thecustomers are changed with the high pace. In this regard, travel and tourism sector places high levelof emphasis on doing R&D activity with an aim to offer innovative services to the visitors. Hence,for this purpose it is highly required for the travel and tourism firms to manage their financialresources in the best possible way. The present report is based on Thomas cook that is a leading tourcompany of UK and offers its services at the global level. In this, report will describe the factorswhich business unit needs to consider while setting the strategic framework. Further, it will alsoshed light on the financial health and performance of Thomas Cook through the means of ratiosanalysis. MAIN BODYExplaining the importance of costs and volume in the financial management of the travel & tourismsectorIn the travel and tourism sector, cost and volume are the main factors which help thecompany in making suitable decision that contributes in the financial management. Moreover,Thomas Cook can make suitable pricing decisions only when it has information about the costincurred for offering services to the customers. For providing tour services to the customers,business organization has to incur several direct and indirect expenses (Xu and et.al., 2012). Alongwith this, there are also some other expenses which business unit has to incur such as R&D,marking etc. for ensuring the smooth functioning of the firm. Hence, by taking into account all suchaspects Thomas Cook can set suitable price of the packages. Through this, company will be able toget profit by recovering its all the expenses. Further, break even analysis is the most effectual technique through which the business unitcan decide the number of tour packages it needs to offer for achieving the situation of no profit andno loss (Chong, Ding and Li, 2015). Along with this, by analyzing the cost volume profitrelationship Thomas Cook can also assess the tour packages which it should offer to get the desiredlevel of profit or margin. In this way, by taking into consideration such techniques business unit candecide the volume which it should offer for getting the economies of scale. Analyzing the pricing methods that are undertaken by the travel and tourism sectorCompanies operating in travel and tourism industry include Thomas Cook which employsfollowing methods for setting the suitable price of tour services are:4

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