Explore Types of Financial Statements and Budgets in Travel and Tourism Industry

This document explores the different types of financial statements and reporting mechanisms used in the travel and tourism industry. It explains the importance and value of budgets for controlling business performance and identifying variances. It also provides interpretation of financial statements and reports for organizations in the industry. The document evaluates business performance based on financial statements and reports. Subject: Tourism, Course Code: P7, P8, M4, D4

THE LEVEL AND TOURISM
BUSINESS TOOLKIT
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Contents
Contents...........................................................................................................................................2
P7 Explore the different types of financial statements and reporting mechanisms for
organisations within the travel and tourism industry...................................................................3
P8 explanation of the importance and value of budgets for controlling business performance
and identifying variances.............................................................................................................4
M4 Interpretation financial statements and reports for organisations within the travel and
tourism industry...........................................................................................................................5
D4 Evaluate business performance based on financial statements reports for organisations
within the travel and tourism industry.........................................................................................5
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TASK 4
P7 Explore the different types of financial statements and reporting mechanisms for
organisations within the travel and tourism industry
British airways is one of the most popular and second major airline of United Kingdom. This
travel and tourism industry provides air line provides services to their customers. They also used
to provide maintain financial statements as it is essential for every business sectors and they are
use as proof document during audit process and representing financial reports in front of
shareholders to interest them the financial performance an position of British Airways within the
hospitality sector. Following types of reports or financial statements are prepared
Financial statements: These statements represent a systematic form of business activities of an
organization. Financial statements also known as financial reports. They shoes organization’s
efficiency and effective’s. British Airways use 4 types of financial statement (Torres-Delgado
and Palomeque, F 2014).
Income statement: This statement also known as profit and loss statement. It shows overall profit
and loss incurred during a particular finical period of time. Manager of British Airway use this
statement to determine net profit, operating profit of business activities.
Balance sheet: These statement define the asset and liabilities of British Airways with a given
time period. It is the most useful and essential financial report used by business organization. It
will also use in division making process.
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Cash flow statement: It is a systematic format within describe the operating, financing and
investing activities related with cash transaction. Cash flow statement is used for profitable
reliable information regarding businesses organization.( Höpken, Fuchs, and Lexhagen, 2015).
Statement of changes in equity: It also defines as statement of retains earnings . This statement
provides information regarding movement of equities for a financial year. Thus statement shows
effect of business accounting policies on British Airways, payment of dividend and changes in
capital structures,
Current ratio
Particular Formula British Airways Iberia
Current ratio Current Assets /
Current Liabilities
1.14 2.51
Return on Assets (ROA)
Particular Formula British Airways Iberia
Return on Assets
(ROA
Net income / Average
total assts
0.67 .30
Debt to Equity (D/E)
Particular Formula British Airways Iberia
Debt to equity ratio Total Liabilities /
Total Equity
0.67 .30
Earnings per share (EPS
Particular Formula British Airways Iberia
Earnings per share Net income/ Average
outstanding shares
0.67 .30
P8 explanation of the importance and value of budgets for controlling business performance and
identifying variances
Budget: It is as systematic statement which shows future business performance in numerical
data. Budget can be define as a statement which provides guideline and show value of saes and
profit in future business activities within a given time period. Probable’s budget is build on the
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basic of analysing past performance of business organization. British Airway use budget as it
provides guiding and direction in the way and next step step taken regarding business activities.
Budget also useful in risk analysis. Managers take decision regarding future activities on the
basis of recognise budget and they also formulate policies of business organization and effective
working strategies through which they can attain foal by using budget of business organization.
Budget plan uses for evaluate value and activities of financial assets, operating, sales and cash
budget are use d to recognised that business organization have sufficient working capital and
financial funds to fulfils their day to day business liabilities. They also useful for taken decision
regarding they have suffice financial resource for the future business project. Budget arise by
every travel organization organization as it will help in identifying the profit an loss and
activities which incurred higher cost ,.By analysing the cost they can able to cut the extra actives
outfit will also use as communication tool because employees can understand by overview of
budget the essential business activities a and plans on which they need to focus during the
business activities. British Airway during preparation of budget the give opportunities to help
them during budget making though which employs encourage and motivated for the
organization.
Variance is also pay essential pat within the business organization. Theses help in providing
information and data regarding difference of between two activities Variance analysis use to
maintain control over a project expense through which they can monitor their entity. Effective
business variances are used for identifies trends, difference , issue and opportunities for business
organization. Theses will help in environment scanning process also. British Airways use
variance as they helps angers in making efficient detailed and forward looking budgetary
decision. Act as control mechanise of business organization and facilities assigning
responsibilities and enhance in controlling mechanising on depts..Variance are related within
saes, material and overvalued. This help in evasion making process of British Areaways (Fuchs,
Höpken and Lexhagen, 2014).
M4 Interpretation financial statements and reports for organisations within the travel and tourism
industry
Financial manger of British airways needs to formulated financial statements which also know as
financial reports. It includes financial cash flow statement, balance sheet, and income statement.
Various ratio ca b only identifies by using the vblce sheet data of British ad Iberia organization.
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By the using of ratio analysing it can be identifies that in 2017 the current and operating position
of British airways is much better then Iberia even their efficiency and financing ratio value is
also higher. Thus facial stamen pays essential parts in travel and tourism industry.
D4 Evaluate business performance based on financial statements reports for organisations within
the travel and tourism industry
Financial anger of British airways prepares budge as it will help in providing information
regarding future business actives and future position f the organization in market pace. These
help in providing guiding the they are made by business organization for according their goals by
formulating effective policies and the basis of budget and variance .
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Torres-Delgado, A. and Palomeque, F. L., 2014. Measuring sustainable tourism at the municipal
level. Annals of Tourism Research, 49, pp.122-137.
Höpken, W., Fuchs, M., Keil, D. and Lexhagen, M., 2015. Business intelligence for cross-
process knowledge extraction at tourism destinations. Information Technology &
Tourism, 15(2), pp.101-130.
Fuchs, M., Höpken, W. and Lexhagen, M., 2014. Big data analytics for knowledge generation in
tourism destinations–A case from Sweden. Journal of Destination Marketing &
Management, 3(4), pp.198-209.
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