HND Travel and Tourism - Unit 2: Finance and Funding in Merlin Plc

This report analyzes the various types of management accounting information utilized by Merlin Plc, a travel and tourism company, to aid in effective business decision-making. It details the use of financial statements (profit and loss, cash flow, and balance sheets) for assessing profitability and liquidity, as well as the application of budgets, variance analysis, and management information systems (MIS) for forecasting and control. The report also examines how this information supports decision-making across different organizational levels (strategic, tactical, and operational), covering issues such as current challenges, capital raising, and investment decisions. The analysis highlights the importance of financial data in setting benchmarks and developing strategies to enhance performance within the travel and tourism sector, including the use of forecasting to estimate future revenues and expenditures. The report references various financial and tourism management resources to support its analysis, and discusses the strategic role of management accounting in achieving financial objectives.

FINANCE AND
FUNDING
TASK 2

2.1 Explanation of various kinds of
management accounting information which
used by Merlin Plc
 In the firm several kinds of systems and information are
required to use as well as implement which support to make
effectual business decision.
 In regard to this, management accounting is one of the highly
used system which includes different information. Further, such
information of respective accounting are described as below:

Financial statements
 It is the tool in which information about the company in
terms of profit, expenses, liquidity etc. are included.
 Generally three financial accounts used by the Merlin
Entertainment Plc which are such as profit and loss (P&L),
cash flow as well as balance sheet.
 With the help of P&L account management of the firm
supportive in order to analyse its profitability situation along
with the expenses.
 Further, by considering cash flow and balance sheet cited
business can assess its liquidity and cash position respectively
at the end of year.

Budgets
 It is the technique of management accounting under
which data and information of the next year are to be
estimated at the current times.
 Budget of the Merlin Plc are made with the help of
taking base to the past financial performance.
 Those data of entity which forecasted through budget
are like sales, cash position, incomes, expenses,
production, material cost etc.

Variance analysis
 Other information which is used by cited entity is variance
where budgeted and actual, these two data are compared.
 Most of the firm adopt this kind of analysis in order to know
business performance which helps to make further strategies
for achieving financial objectives.
 When output is positive and negative the business performance
will be considered as favourable or adverse respectively.

Management information system (MIS)
 The tool which provides information about the company in
order to manage and control over the plan is known as
management information system.
 By taking support of this respective tool Merlin Plc take all
the management oriented information and data which helps
to make effectual business decisions.
 Further, in order to resolve business problems lower level of
managers and employees consider MIS system as it is
information processing tool.

Forecasting
 It is the method of management accounting under which
financial data and other required information are predetermined
by the company is known as forecasting.
 The Merlin Entertainment Plc used this particular technique or
tool in order to predetermine or estimate future incomes or
expenditures as well as the demand of the tour products in
further period.

2.2 Assessing management accounting
information as a tool of decision making within
Merlin Entertainment Plc
 At the working environment of Merlin Entertainment
Plc there are various number of problems and situations
come into consideration.
 Further, in order to resolve them and make business
environment highly better, some kinds of management
accounting information are undertaken by the Merlin
Plc.
 After taking base of such kinds of data it able to make
fruitful business decisions which are discussed below:

Current issues
 By analysing the financial performance like profitability and
liquidity, the company knows that due to which reasons
specific problem arise and resolve.
 Moreover, after making comparison of past and present
business performance Merlin Plc analysed current issues
faced by it.
 Those causes which lead to create obstacles, that can be
easily resolved and profitable business decisions can be
made which helps to enhance level of performance within
travel and tourism industry.

Forecasting
 With the help of budget section various kinds of data as well
as information are to be forecasted within workplace of
Merlin Plc.
 When data are estimated then management able to frame and
make effectual kind of strategies to meet with them.
 It helps to make decisions of cited company in terms of
financials which lead to increase revenue and profit at the
end of accounting year.
 It is one of the widely used due to giving clear scenario of
the next years in the current financial period.

Set benchmarks
 When the data are predetermined by management then
able to set standards and benchmarks in proper ways.
 By using this kind of data, Merlin Plc can make
business strategies in appropriate ways which supports
to achieve benchmarks and increase business
performance in highly effectual ways.
 The Merlin Plc use this for preparing better plan and
take profitable business decisions.

Raising capital
 At the time of introducing new project or product in the
company, fund or capital is widely required.
 Due to lack of money it is not possible to expand business and
requirement of raining capital is analysed with the help of
budget management accounting.
 Along with this, decision to use specific source in order to
raise fund from market is taken by using the information of
management accounting.
 Moreover, source of capital raining which can be used are like
bank loan, equity shares, government funding, European social
fund etc.