Unit 2 Finance: Management Accounting & Decision Making - Tourism

This report discusses the application of management accounting information within the travel and tourism sector, specifically focusing on Merlin Entertainment plc. It identifies various types of management accounting information, including forecasting, budgeting, accounting for decision making, investment appraisal, cash flow forecasts, and variance analysis. The report further assesses the use of management accounting information as a decision-making tool, highlighting ratio analysis and variance analysis. Profitability ratio defines about financial revenues gained by business and profits gained by firm in a set time interval are described under it. The document emphasizes the importance of these tools in supporting strategic and operational decisions within travel and tourism businesses. Desklib offers a wide range of study resources, including past papers and solved assignments.

FINANCE AND FUNDING
IN TRAVEL AND TOURISM
SECTOR

2.1 Different types of management
accounting information
Merlin Entertainment plc is an entertainment
company of Uk. It is wide spread has three
divisions of its business (Wooller, 2014). As a
management employee of the business, manages
financial system and practices would like to
express types of management accounting
informantion uses in the organisation.

Continued...
Management accounting information focuses
on internal managers and useful for
decision makers. It is a useful term to get
financial data to managers on basis of
which managers take decisions and make
further planning structure (Gatti, 2013).
There are different kinds of managemnt
accounting information uses in Merlin
Entertainment can segments as:-

Continued...
 Forecasting:- This tool includes in planning
structure. Aim of forecasting is to try to determine
the result of further operations through trend analysis
(Mohanty and et. al., 2012).
 Budgeting:- Budgeting is a vital technique of
financial sucess. Merlin Entertainment creates budget
makes easy to take any decision through predict size
of income and expenses about the structure of
allocation in monetary terms (Baumol and et. al.,
2012).

Continued...
Accounting for decision making:- Management
accounting information's decision making tool
plays great role to make decisions on behalf of
financial data and information of statement
profit and loss statement and balance sheet
(Lapavitsas, 2012). Effecient managerial
acconting takes risk out of decision making and
analyses past trends are able to create a frame
of the future and is useful for planning structure
for future strategies.

Continued...
 Investment appraisal:- It is a useful tool to
decide a particular investment is worthwhile or
not. It watch out at cost of investing, for
example, in a new organisation this processes.
 Cashflow forecasts:- It looks at future flows of
costs and gaining. Merlin Entertainment uses
this tool to plan expenses and makes decisions
on things on which business needs to borrow
(Finnerty, 2013).

Continued...
Variance analysis and cost accounting:- It is a
process to predict comparision of the actual
expenses with budgetd expenses (Mutch,
2016). If correction seems necessory then
variations are checked and corrected. If
positive difference occurs then it considers like
decision made was correct and produces
increasing in production in try to increase profit
margin of the organisation.

2.2 Using of management accounting
information as a decision-making tool
Ratio analysis:- Ratio analysis considers as
completed at the end of each financial period in
different periods as- monthly, quarterly and
yearlly for determining the Merlin Entermain's
capacity to pay long term and short term debts
(Wooller, 2014). This analysis refers the
arrangement of team whether the organisation
operates within complete guide helpful to
promote profitability.

Continued...
Merlin entertainment plc is a leading entertainment based
company that provides superior quality services for its
clients. Operations of the enterprise has been spread in
23 countries and large number of consumers are rendered
accommodations, rides and shows (Gatti, 2013). In
addition to this Resort Theme park is also operated by
corporation in which entertainment services are offered
to clients. It is vital for management of organization to
make effective strategies and action plans for executing
desired operations of business in successful manner.

Continued...
Variance analysis :- this is used for comparing actual
expenses of corporation with the estimated expenses and
on the basis of that it can be identified that firm is
performing as per the set targets and objectives (Mohanty
and et. al., 2012). There are some other ratios also which
are used in management accounting and it is vital that this
ratios should be properly analyzed so that decisions for
business can be taken in effective manner. Profitability
ratio defines about financial revenues gained by business
and profits gained by firm in a set time interval are
described under it.

Rreferences
Wooller, J., 2014. The Finance Funding Directory 2014/15. Harriman House
Limited.
Gatti, S., 2013. Project Finance in Theory and Practice. Academic Press.
Mohanty, P. and et.al., 2012. Principles of Coorporate Finance. Tata McGraw-
Hill Education.
Baumol, W. and et.al., 2012. The economics of Mutual Markets. Springer
Science & Business Media.
Lapavitsas, C., 2012. Crisis in the Eurozone. Verso Books.
Finnerty, D. J., 2013. Project Financing. John wiley & Sons.
Bandy, G., 2014. Financial Management And Accounting in the Public Sector.
2nd ed. Routtledge.
Mutch, E. R., 2016. Campaign Finance. Oxford University Press.