Ensuring Financial Viability: Managerial Decisions and Considerations

This essay delves into the critical decisions managers of tourism organizations must make to ensure financial viability. It categorizes these decisions into financing and investment decisions, exploring various funding sources such as short-term bank overdrafts and long-term equity and debt financing. The essay discusses the costs associated with equity and debt, including share issuance, dividends, interest, and borrowing expenses, and examines factors influencing financing choices like tax deductions and control implications. Furthermore, it outlines investment appraisal techniques for both short-term (break-even analysis) and long-term investments (payback period, NPV, and IRR), emphasizing the importance of considering the time value of money. The conclusion highlights that effective decision-making depends on a thorough understanding of financing costs and the application of appropriate appraisal techniques, with NPV and IRR being particularly valuable for their consideration of the time factor in repayment.