Financial Analysis of a Local Wildlife Trust: Funding and Management

Desklib provides past papers and solved assignments for students. This report analyzes the financial health of a UK wildlife trust.

Finance and Funding in the Travel and
Tourism Sector
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Table of Contents
Introduction:...................................................................................................................................................4
Task 1:............................................................................................................................................................5
A):..................................................................................................................................................................5
B):..................................................................................................................................................................6
C):..................................................................................................................................................................8
D):................................................................................................................................................................10
E):.................................................................................................................................................................12
F):.................................................................................................................................................................13
G):................................................................................................................................................................14
Task 2:..........................................................................................................................................................15
Section 1.......................................................................................................................................................15
H):................................................................................................................................................................15
I):..................................................................................................................................................................16
J):..................................................................................................................................................................18
K):................................................................................................................................................................19
L);.................................................................................................................................................................22
Section B......................................................................................................................................................23
M):................................................................................................................................................................23
N):................................................................................................................................................................24
O):................................................................................................................................................................27
Conclusion...................................................................................................................................................28
Reference:....................................................................................................................................................29
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Introduction:
Financial information's is the useful and most important figures and data's for the stakeholder
and management as well as for the decision making the process for the company and individual.
Management accounting Information's Like Cost volume profit analysis, Statement of accounts
and various tools for interpretation can determine the financial performance of the company and
provide a framework for the decision making by management. So in this assignment, we will
study the detailed analysis of management information tools and techniques and their importance
in the decision making for the management of the company. Management financial information
can define the details of the activities and operations of a company of trust for better evaluation
of financial performance and position of the company.
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Task 1:
A):
Introduction
When we talk about any of the financial decision there are many of the factors pre-exist in the
environment which influences the decision. Cost and volume can be the financial factors which
can influence the decision making for the company. For wildlife financial decision which is
based on the volume and cost of the project so that they can set the pricing method for the
profitability of the project. There are many of the factors which can influence the profitability of
the company and it can be overcome by the uses of the various financial tools Like, Variance
analysis, projections and forecasting for the budget of the trust. The financial tool can help
management for taking the financial decision for profitability.
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B):
Cost can be a major part of the financial decision of the company. Local wildlife trust set the
pricing which can be based on the costing of the project. There are variable and fixed costs
which make a huge impact on the profitability of the price (Novák, 2014). Cost can determine
the base for the decision related to the pricing and financial strategy for the company as a
company want to know Break-even point for the operations they need to analysis the cost factors
as follows:-
1.1):
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1.1 Calculation of Break Even Point for the Local wildlife trust
Given Information
Fixed Cost - £5,000
Variable cost - £8
Sales per unit - £12
Break-even Point ( In Unit ) = Fixed Cost
Sales per unit - Variables per unit
Break-even Point ( In Unit ) = 5000
4
Break-even Point ( In Unit ) = 1250 Tourist package
If variable cost per unit is increased to £10 Then Break Even Point is -
Given Information
Fixed Cost - £5,000
Variable cost - £10
Sales per unit - £12
Break-even Point ( In Unit ) = Fixed Cost
Sales per unit - Variables per unit
Break-even Point ( In Unit ) = 5000
2
Break-even Point ( In Unit ) = 2500 Tourist package

The volume of the product and services is a major part for the financial decision in any of the
organisation. For a wildlife trust, it can determine the profitability scenario of the company or it
can be assured the management about the growth of the company in reference to profit. Trust
need a minimum number of volumes for the tourist visit so can they suffer the cost of the project
or operations. It can be understood by the following example given below that volume how can
be an important part for desire profit of the organisation by management (Patni, 2015).
1.2):
Calculation of Volume of tourist to earn the profit of £3,000
Given Information
Profit - £3,000
Fixed cost - £5000
Variable cost - £8
Sales per unit - £12
Volume ( In Unit ) = Fixed Cost + Profit
Sales per unit - Variable per unit
Volume ( In Unit ) = 8000
4
Volume ( In Unit ) = 2000 Tourist package
Verification of volume for desire profit
Particular Units Per Unit cost Total Cost
Sales 2000 12 24000
Less - Variable cost 2000 8 16000
Contribution 2000 4 8000
Less - Fixed Cost 2000 2.5 5000
Profit 2000 1.5 3000
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C):
Local wildlife trust needs to be set a certain type of pricing strategies for deciding the price of the
admission fees for the trust. Local wildlife trust needs to set the appropriate price for the
admission fees and tourist tickets which is according to the market and the cost of the company.
Cost based pricing methods are most commonly used pricing strategy which can carry the sense
of financial information’s. This method can be adding various methods for the price
determinations as adding the margin and mark up in the cost so that they justified the cost of
operations. In this pricing strategy Cost volume analysis is play a vital role so that it can reflect
the relations of cost volume and profit which can be a helpful tool to define the price for the trust
(Toni al. et, 2016).
There are some general pricing strategies is used by the trust for setting their price for
admissions:
 Cost-plus margin: - Cost plus margin is the pricing strategy which is used to set the price of the
product and service which is based on the cost of the project after adding the margin on the Cost
of the project. It can be helpful for the trust as they are a focus on the cost of the animals and
their living cost which can be determined by the fixed and variable cost of the wildlife area so
that they add margin in the cost for their operations to set the price of the admission ticket.
 Mark-up Price: - Mark-up is a pricing strategy which defines the mar-up percentage on the cost
of the operation. It is based on the cost of the services. Mark-up added in the cost (Fixed Cost +
Variable Cost). Management use this strategy to set a standard for the cost efficiency of the
service or as a trust company had the main source of income is their tickets of the visitors so they
set the price ass comparing with the cost for that wildlife station (Cooper, 2014).
 Targeted return Pricing: - Targeted return pricing is defined as the pricing method which defines
the expectations of the investor that what he or she expects from the investment. Return on the
investment if the factor which determines the price of the services. It depends on the expectations
of the management toward the return on the investment.
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As it concerns with wildlife trust we suggest them to adopt the targeted pricing strategy for the
pricing of admission fees for the wildlife destination. Here management work to manage many
more factors which can influence the cost directly or indirectly so management needs to ascertain
the return on their investment which can be a deciding factor for the pricing of Wildlife trust. So
they try to ascertain the cost of the project and determine the expected returns for their investor
which helps them to determine the price of the services.
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D):
Local wildlife trust is affected by the various factors in the environment. Local wildlife is
surrounded by the environment which had a factor which can influence the profitability of the
organisation. Some of the factors are as follows:-
 Cost of Production: - Cost of production is a factor which influences the most to the price and
profit of the company. As a wildlife trust, they have many of the cost attached like security for
the animals, Land acquisition, rental expenses, Infrastructure expenses and many more
administrated expenses.
 Interest expenses: - Trust had the limited source of the income and fundraising so they had to be
depended on the debts for the financing of the project which can increase the interest expenses
which make a negative impact on the profit or liquidity of the company.
 Competitions: - Local wildlife trust works on the operation which provides the visitor to visit the
wildlife journey on a fix admission charges. UK had the fierce competition in the UK world
which can influence the profit for the organisation. In term of profit that trust is reliance on the
volume of the visitor which can affect the profit of the organisation.
 Overhead Cost: - For a Wildlife, trust overhead can be a major part in the cost structure of the
company which can influence the profit. Overhead can be directly touched on the profit as for
wildlife organisation they need to make an expensive budget for the overhead expenses to
maintain the destination for the wildlife journey of visitors.
 Value per Unit: - Profit is also determined the value which is provided by the organisation to the
visitors is according to the amount they spend on the ticket of the journey. IT can determine the
return which visitor expected for the price they spend for the tour of wildlife journey.
 The economy of scale: - As the company is a local wildlife trust which not have a large scale of
productions and operations. The scale of working can influence the cost in an extensive way
which can be the diversified impact on the profit as the cost of living for animal take a high
charge in the cost sheet.
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Factor affecting the profit of a wildlife trust
Internal Factor External Factor
Cost for the production –
Prime cost
Administrative cost
Selling and marketing cost
Return on Investment:-
Management Returns
Shareholder Expectations
Capital Structure:-
Debenture Expenses (Interest)
Long terms loans ( Interest )
Government Policies:-
Taxation Structure
Subsidies related to wildlife
Government compliances
Competition:-
Pricing policies of market
Financial Practices by rivals
Competition structure
Market:-
Demand for the services
Funding sources availability
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E):
Management accounting information system had many of the tool or technique which enables
management to take the right decision. As a local wildlife trust concern, some of the tool or
technique is used by management to take the right decision for the financial stability of the
organisation. Some are as follows:-
Variance analysis:
Variance analysis is management tools which define the difference and variance in the
operations of the company. A trust which provides wildlife journey to the visitor can use the tool
to evaluate the financial performance and deviations from standard targets so that they take any
correct decisions according to that situation.
Budgetary Control:
Budgetary control is defined as the process of setting a systematic plan for the operations so that
they can control the expenses and activities to overcome the variance. It can be a useful tool for
the wildlife trust as they can monitor the expenses and income which enable them to understand
and evaluate the performance for the profit maximization in the company.
Forecasting:
Forecasting is defined as the future assessment or projections of the activities of the company so
can they develop the appropriate plan towards the growth path of the company. It defines the
sources from which trust can acquire fund for the future project and make a future scenario of
wildlife trust.
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F):
Ratio analysis is defined as the comparisons of various ratios to evaluate the financial
performance of the company. The ratio can be helpful to evaluate the financial performance of
the company which drive management. It can be used to define the relationship between various
financial items to evaluate the performance and compare with other companies financial
information. There are many kinds of the financial ratio is used to evaluate the performance of
the operations and financial structure of the trust.
Profitability ratio:
Profitability ratio defines the relation between the turnover and profit of the organisation so can
they identified the performance of the company for better management and decision making
required for further activities.
 Net profit ratio: - Net profit ratio defines the relation with of net profit from the operation of the
trust. It can determine the earning on the total revenue of the trust.
Details used from Annual report of 2018 from as follows ( wildlondon, 2019):
Net profit from operations: £530,000
Net Revenue from Operations: £ 38, 23,000
Net Profit Ratio = Net Profit from operations
Net Revenue from operations
Net Profit Ratio = 5,30,000
38,23,000
Net Profit Ratio = 1
72
Strategic Decisions:- Here Management analysis the profitability of London wildlife trust based
on their past experience where they earn the profit of 13.88 % which reflect a better performance
in profitability which drives them to make decisions for any expansion activities for Trust.
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