Finance and Funding in Travel and Tourism Sector: Task 2 Analysis

This presentation provides an overview of finance and funding within the travel and tourism sector, emphasizing the role of management accounting information in effective decision-making. It introduces key management accounting tools such as financial statements (statement of comprehensive income, statement of financial position, and statement of cash flow), budgetary planning, variance analysis, and ratio analysis. The presentation also covers investment appraisal techniques, including both non-discounting (payback period, accounting rate of return) and discounting methods (net present value, internal rate of return). Real-world examples, such as Merlin Entertainment Plc, are used to illustrate the practical application of these tools in analyzing financial performance, forecasting future results, and evaluating investment opportunities within the travel and tourism industry.

Finance and Funding in Travel and
Tourism sector
TASK 2

INTRODUCTION
• In current ultra-competitive world, Merlin Entertainment Plc's managers gather
multiple data set, inspect, analyze and draw useful inferences from the same to
reach prudent business decisions.
• The aim of the presentation is to introduce some of the important management
accounting information tools along with their uses to make decisive decisions.

Different types of management accounting information
Financial statements of Merlin Entertainment Plc
1. Statement of comprehensive income: Expenditure, income and net
profit
2. Statement of financial position: Assets, Liabilities and equity
3. Statement of cash flow: Sources of cash and its uses
• Operating activities: Sales, cost and other daily expense
• Investing activities: Assets purchase and disposal
• Financing activities: Debt and equity collection and payment

Contd…
• Budgetary planning and controlling: Forecasting of future operational
results such as possible revenue and expected cost
• Variance analysis: Deviation between budgeted and actual outcome

Use of management accounting information as a
decision making tool
• Trend analysis: Comparison of current year against preceding year’s
performance
• Forecasting through budget preparation
• New products and services for profitability enhancement

Ratio analysis
• Profitability ratio: Gross profit ratio, net profit ratio, return on equity
Liquidity ratios: Current ratio, Acid test ratio
• Solvency ratio: debt equity ratio, Interest bearing ratio
• Efficiency/Activity: Debtors turnover ratio, stock turnover ratio,
creditors turnover ratio
• Investment performance: Earnings per Share

Investment appraisal: Non-discounting
• Pay back period: To know the period of recovery of initial investment
• Accounting rate of return: Average accounting return percentage on
average investment

Discounted techniques of investment
appraisal
• Net present value: excess of sum of present value of predicted cash
inflows over required outlay
• NPV = Total cash inflows – Initial investment
• Internal rate of return: Rate of discounting which makes
present value equal to the initial investment

REFERENCES
• Baum, A. E. and Crosby, N., 2014. Property investment appraisal.
John Wiley & Sons.
• Bebbington, J. and Thomson, I., 2013. Sustainable development,
management and accounting: Boundary crossing. Management
Accounting Research. 4(24). pp. 277-283.

Thank You!