Financial Analysis of Carnival Corporation & PLC and Fulham Shore PLC

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FINANCE AND FUNDING IN THE TRAVEL
AND TOURISM SECTOR
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Table of Contents
LIST OF TABLES...........................................................................................................................3
INTRODUCTION...........................................................................................................................4
TASK 1- REPORT..........................................................................................................................5
1.1 SIGNIFICANCE OF COSTS, VOLUME AND PROFIT WITH RESPECT TO
CARNIVAL CORPORATION & PLC.......................................................................................5
1.2 PRICING METHODS BY TAKING EXAMPLES FROM DIFFERENT CRUISE
BRANDS OF CARNIVAL CORPORATION & PLC...............................................................8
1.3 DIFFERENT FACTORS INFLUENCING THE PROFIT IN CARNIVAL
CORPORATION & PLC CRUISE BRANDS............................................................................9
TASK 2- TRAINING PACKAGE................................................................................................11
2.1 TYPES OF MANAGEMENT ACCOUNTING INFORMATION IN CONTEXT TO THE
FULHAM SHORE PLC............................................................................................................11
2.2 USE OF MANAGEMENT ACCOUNTING INFORMATION BY THE FULHAM
SHORE PLC AS DECISION-MAKING TOOL.......................................................................11
TASK 3- REPORT........................................................................................................................23
3.1 FINANCIAL STATEMENT ANALYSIS FOR THE FULHAM SHORE PLC BY
COMPARING TWO YEARS PERFORMANCE.....................................................................23
TASK 4- LEAFLETS....................................................................................................................28
4.1 SOURCES AND DISTRIBUTION OF FUNDS FOR CAPITAL PROJECTS
DEVELOPMENT IN TOURISM..............................................................................................28
CONCLUSION..............................................................................................................................31
REFERENCES..............................................................................................................................32
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LIST OF TABLES
Table 1: Financial figures for The Fulham Shore Plc....................................................................23
Table 2: Calculation of key ratios for the year 2018 and 2017.....................................................25
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INTRODUCTION
Travel and tourism sector plays a vital role in an economy as it contributes a lot to the
development of an economy. Similarly to boost this sector there is a necessity to keep in
consideration the finance and funding needs. This assignment deals with rendering better insights
about the costs, volume and profits with context to the Carnival Corporation Plc and will also
provide a better understanding of the management accounting information for The Fulham Shore
Plc. Later in this assignment, the financial accounts of The Fulham Shore Plc will be analysed
and interpreted that will help in analysing the financial position of the firm. At last in order to
better understand the sources and distribution of funds in tourism sector leaflets will be prepared
which will help in gaining skills and knowledge about the same.
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TASK 1- REPORT
Introduction
As a trainee business adviser at Carnival Plc London the insights will be laid over the financial
system and practices which are well applied by different cruise lines of Carnival Corporation &
Plc. This report will aim to better impart the information about the different pricing methods as
well which are used by the firm and will also keep in consideration different factors which
influence the profits for Carnival Corporation & Plc.
Body
1.1 SIGNIFICANCE OF COSTS, VOLUME AND PROFIT WITH RESPECT TO
CARNIVAL CORPORATION & PLC
Financial management emerges to be a vital activity employed by Carnival Corporation which
helps in ensuring planning, organising, controlling and monitoring of the financial assets and the
resources with the business so that the desired goals and objectives are achieved (Mårtensson et
al., 2016).
For Carnival Corporation it is a vital aspect to consider and determine the price of the packages
so that clients can be charged a cost against the services received by them. Taking effective cots
and volume decision helps in ensuring the effective decision making by a firm (Nielsen et al.,
2015).
Costs
Cost is defined as the value which is related to the expenses that are incurred while determining
the tour and travel packages (Khan, 2015). There are different types of costs incurred by the
travel and truism business like that of the Carnival Corporation Plc which are discussed as under:
Fixed costs
Carnival Corporation & Plc incurs fixed costs which do not change with the change in the
number of clients rather it remains fixed. It may involve lighting expenses and other contract
payments with the vendors (Nielsen et al., 2015).
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Variable costs
Some of the variable costs which change with the amount of the client’s number and includes the
cost which is incurred in hiring new employees and the other accommodation expenses (Khan,
2015).
Direct costs
The costs which are incurred to offer the services to the customers in the form of the business
packages and the travel packages by making arrangements for them foods, spas and hotel
facilities (Collier, 2015).
Indirect costs
The costs which are incurred by Carnival Corporation & Plc such as hiring professionals,
developing online software and the advertisement expenses are known as indirect costs (Collier,
2015).
Volume
Volume is defined as the quantity which Carnival Corporation Plc will keep in mind while
providing its services across the globe (Arbelo et al., 2017). For the same many tools and
techniques are used so that the firm can identify the ideal volume of the tour and travel package
and maximise the profits (Boardman et al., 2017).
Break-even analysis
For determining the point at which Carnival Corporation & Plc will stop incurring the costs and
will start incurring profits at an adequate level (Khan, 2015).
Cost- profit-volume analysis
This analysis will help in ensuring a volume of Carnival Corporation Plc such that the changes in
costs and volume may be effectively determined and the effect that it creates on the operating
income and profits can be better analysed (Collier, 2015).
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Importance of cost volume and profit for Carnival Corporation & Plc
Cost
For Carnival Corporation &
Plc the importance of costs is
due to the reasons that it
helps it in reducing the price
incurred by the firm related
to the travel packages
(Zulfakarova et al., 2016).
Volume
Volume is important for
Carnival Corporation & Plc as
it helps in deciding the volume
so that the costs can be
reduced and profits can be
maximised as desired (Arbelo
et al., 2017).
Profits
The profits need to be
effectively determined by
Carnival Corporation & Plc so
that business functioning can
be boosted and the required
amount of funds can be better
plugged back in business
(Zulfakarova et al., 2016).
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1.2 PRICING METHODS BY TAKING EXAMPLES FROM DIFFERENT CRUISE
BRANDS OF CARNIVAL CORPORATION & PLC
Pricing methods in travel and tourism sector help in setting prices for the various products
offered to the tourists and customers by effectively including the profits to a great extent and
ensuring the quality of services as well (Khan, 2015).
There are different pricing methods that are adopted by Carnival Corporations & Plc so as to set
the prices effectively and attract more customers. Few pricing methods are discussed as under
which are adopted by the firm:
Skimming pricing
Under this method, Carnival Corporation & Plc follows the pricing methods by setting relatively
high for the services and products offered and thus it ensures the cost recovery by earning high
profits through this method (Laitinen, 2018).
Penetration pricing method
This method is adopted so as to attract more customers and thus the prices set are low and leads
to an increase in sales. There is an issue as the share of profits earned in this method is relatively
low so the firm has to face a lot as a result (Belarmino et al., 2019).
Seasonal wise pricing
According to this method adopted by Carnival Corporation, it fixes the prices for the customers
in accordance with the seasons and demand of the tourists which varies in accordance with the
seasons. It tends to charge high prices to the tourists in time of the peak seasons when the
demand is high and it tends to reduce the price3s at offseasons so as to attract the customers.
Cost based price method
Under this method, the tour packages are priced in alignment to the total costs incurred by the
tour and travel packages offered by Carnival Corporation and then adding a particular margin of
the amount as profit in that price which will then help Carnival in determining the price per unit
cost (Belarmino et al., 2019).
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1.3 DIFFERENT FACTORS INFLUENCING THE PROFIT IN CARNIVAL
CORPORATION & PLC CRUISE BRANDS
In the travel and tourism sector, the profit is influenced by many ways of Carnival Corporation &
Plc cruise brands which should be undertaken effectively so as to maintain the profitability of the
firm. Some of the factors influencing the profits are as under:
Climatic changes
One such factor which influences the profitability of Carnival Corporation & Plc involves the
climatic changes and the weather conditions which define the peak and off seasons for Carnival
Corporation & Plc. During favourable weather conditions, tourists visit in great number and so
the adequate profits are earned by the firm (Lomborg, 2014).
Tourism seasons
It is another factor that influences the profits of the firm as Carnival Corporation & Plc
categorises its season as peak seasons and off seasons which during such time has varying profits
(Henderson et al., 2015). At peak seasons the profit earning capacity of the firm is enhanced as it
charges high prices from customers and incurs huge profits which on other in case of off-seasons
are a different case (Khan, 2015).
Terrorism
There is much increase in the terrorist activities which sometimes leads to the downfall of
tourism activities. Due to the same tourist don’t feel safe and thus changes their plan to visit the
place which ultimately affects the profitability of the firm (Vanhove, 2017).
Political changes
There are many changes such as governmental and taxation policies which affect the working of
the travel and tourism sector (Vives et al., 2018). There are also some regulations regarding
foreign trade and legal changes that affect the business activities and thus influences to a great
extent the profit margins of the company (Henderson et al., 2015).
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Bad debts
This is an internal factor which influences the profits in case of Carnival Corporation & Plc as,
when the customers do not pay the amount of the services received these expenses are charged
by the firm in its profit and loss account which ultimately reduces its profit margin (Lomborg,
2014).
Conclusion
It can be concluded that for Carnival Corporation & Plc costs, volume and profits plays a vital
role as it helps in taking many effective investment decisions which ensures profitability and
success in the long run. There are many internal as well as external factors that must be
considered so as to enhance tourism and profitability decisions by Carnival Corporation & Plc.
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TASK 2- TRAINING PACKAGE
2.1 TYPES OF MANAGEMENT ACCOUNTING INFORMATION IN CONTEXT TO
THE FULHAM SHORE PLC
2.2 USE OF MANAGEMENT ACCOUNTING INFORMATION BY THE FULHAM
SHORE PLC AS DECISION-MAKING TOOL
Slide 1
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Slide 2
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