FINANCE AND FUNDING
This presentation is the property of its rightful owner.
Sponsored Links
1 / 15

Sample Assignment - Finance and Funding PowerPoint PPT Presentation


Assignment Prime provides samples to the students without any charge. Students can get A grades in their assignments by taking assignment writing help from our professional skilled writers.

Download Presentation

Sample Assignment - Finance and Funding

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Sample assignment finance and funding

FINANCE AND FUNDING

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................3

TASK 1............................................................................................................................................3

1.1 Importance of cost and volume in financial management of travel and tourism.............3

1.2 Analysis of pricing methods used in travel and tourism...................................................4

1.3 Analysis of factors including profit for travel and tourism business................................5

TASK 2............................................................................................................................................6

2.1 Different type of management accounting information's that are used by the travel and

tourism business.....................................................................................................................6

2.2 Use of management accounting information as a decision making tool..........................7

TASK 3............................................................................................................................................8

3.1 Interpretation of travel and tourism accounts...................................................................8

TASK 4............................................................................................................................................9

4.1 Sources of funds for the projects......................................................................................9

CONCLUSION..............................................................................................................................10

REFERENCES...............................................................................................................................11

Appendix........................................................................................................................................13

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

INTRODUCTION

Management accounting play very important role in taking cost related decisions.

Thomas cook is a large travel and tourism company that have operations in the number of

nations of the world. In the report various techniques like break even analysis are described in

detail. After that factors that need to be keeping in mind while determining a price are also

discussed in the report. Along with this, some of the factors that need to be analyzed in order to

understand travel and tourism industry are discussed in detail. In the middle part of the report

ratio analysis is done and its results are interpreted in relation to Thomas cook. At the end part of

the report, sources of finance are proposed for the Thomas cook and their suitability to the

mentioned firm is also discussed in detail.

TASK 1

1.1 Importance of cost and volume in financial management of travel and tourism

Cost and volume have a great importance in the financial management of Thomas cook.

It is cost and volume that determine firm finance needs. Cost refers to the costs like fixed and

variable. Whereas, volume refers to the quantity of goods that firm produce in a given year. Cost

and volume both are interlinked to each other if volume gets increased then cost will certainly

increase vice-verse. In order to pay cost funds are required and to produce specific quantity of

product funds are required. Currently, economy is uncertain and due to this reason price of the

commodities are increasing (DRURY, 2013). This trend is seen especially in case of base metals.

Due to increase in price of the base metals firms production cost is elevated. Simultaneously,

funds requirement of the firms also get increased. Thomas cook is operating in the travel and

tourism industry and currently due to recession in an economy less people are taking interest in

visiting any place. In some nations it is growing but at the low pace. Due to this reason

companies like Thomas cook are facing lots of problems in their business. Staying cost and

travel cost is increased all over the nations and due to this reason cost also gets increased. This

increase package cost and firm need more finance to fund its requirements (Nandan, 2010). In

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

such a competitive business environment firm cannot pass burden of increase in cost on its

customers. In this situation firm will need to generate economies of scale in its business. It refers

to the measures that will be taken in order to reduce cost of packaging. If this cost will be

reduced then funding requirements of the firm will also get declined. Hence, complexity related

to finance management for the firm will reduce to some extent. So, it can be said that both cost

and volume are closely related to the financial management of the firm. As mentioned above that

if fund requirement is high then high amount of fund need to be raised from the banks and other

financial institutions. If the raised amount is high then it becomes very difficult for the managers

to allocate fund among different expenses. Managers have to consider lots of things in order to

make this allocation in proper manner. If higher amount of funds are raised then complexity of

funds also get increased. Hence, cost and volume are closely related to the financial

management.

1.2 Analysis of pricing methods used in travel and tourism

In order to determine price several factors are considered by the Thomas cook. Price of

package is prepared on the basis of fixed and variable cost. Fixed cost refers to the cost that

never gets changed during life time of the firm. This cost can be increased with purchase of

machines and other equipment's but cannot get declined (van der Steen, 2011). On the other

hand, there is a variable cost which refers to the cost that keeps on changing continuously. This

cost includes the expenses like wages and electricity etc. By combining fixed and variable cost

Thomas cook determine a total cost of the package. After determination of cost firm takes an

average of the customers that normally visit through its agency. It divides cost of package by the

average number of tourists in order to arrive at per unit cost that will be charged on the tourists.

On this cost Thomas cook add a commission and by adding that commission final price of the

package is determined. Apart from this, there are several other factors that are considered for

determining a price. Some of these factors are as follows:

1. Competition- Thomas cook is operating in the highly competitive industry and in order to

give stiff competition firm needs to consider price that is charged by its competitors. It

cannot solely focus on the cost of its package. It is possible that cost of package of

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

Thomas cook may be higher than competitor package (Haiza Muhammad Zawawi and

Hoque, 2010). If due attention will be given only on cost then firm will legged behind in

competition. Hence, firm needs to determine price by keeping in mind competitor pricing

strategy.

2. Demand- In particular session demand from tourist side gets increased. This is a time

period in which there is a lot of opportunity that is available to the firm. In such time

period Thomas cook must reduce price of its product in order to increase its customer

base.

3. Target market- Thomas cook can also select its specific target market like London etc in

order to increase its target base. Mentioned firm can prepare attractive tourist package in

order to persuade people. Hence, this is also an important technique that can be employed

by the Thomas cook.

The other two important techniques that can be used by Thomas cook are as follows.

1. Break even analysis- In the above pointit was mentioned that firm must look at the price

that is charged by the competitor firm. If their price is low then firm must also charge a

low price on the people. But it is also necessary to make sure that at least cost get

recovered even price is reduced (Lee, 2011). By doing break even analysis firm can

determine a minimum level of profit that it need to earn to cover its entire cost. At this

specific level there will be no profit and no loss situation. Following steps are follows in

this calculation.

Step 1- In the first step projected sales is determined.

Step 2- In the second step expenses are classified in to fixed and variable cost.

Step 3- In the third step contribution margin is calculated by the manager. In this regard

following formula is used by the managers in an organization.

Contribution margin- Sales – Variable cost

Sales

Step 4- This is the final stage in which break even analysis is done by applying a following

formula.

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

Total fixed cost

Contribution margin (%)

2. Preparation of cost sheet

It is a statement in which estimates about the cost are prepared by the Thomas cook.

Managers need to make accurate estimate in order to determine cost of the tourist package.

1.3 Analysis of factors including profit for travel and tourism business

Profit- Profit refers to the amount of profit that remains after deducting all expenses from

the revenue that is earned by the firm. Thomas cook is in travel and tourism industry and

it is highly competitive industry. Recession greatly affects travel and tourism industry of

UK. Due to recession growth rate of the industry become slow in the UK. Hence,

profitability of the firms operating in this industry get erodes (ter Bogt and van Helden,

2012). It is evident from the Thomas cook financial statement in which its profit is

declining continuously. Thus, it can be said that there is a critical condition in the travel

and tourism business in the UK.

Domestic tourism - If we analyze UK travel and tourism industry then it can be seen that

there is a very high proportion of inbound tourism relative to outbound tourism.

However, segments of outbound tourism like business people and students are growing

rapidly. But till the date inbound tourism is a business segment that is contributed to large

extent to revenue of the firms operating in this industry. Due to this reason, Thomas cook

needs pay heavy attention on the inbound tourism relative to outbound tourism.

Growth rate of tourism industry in UK- in UK travel and tourism industry is growing at

a moderate pace. But its growth rate is higher than the UK GDP growth rate. From this

angel growth rate of the firm seems impressive. In future it is expected that this sector

will certainly grow at a rapid pace (Burritt and Schaltegger, 2010). This is because this

sector has a 10% share in the UK GDP and it is a main source of earning for the

government. Moreover, it is providing employment to large number of people. Due to this

reason UK government is paying special attention on this factor. Apart from this, UK

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

economy is coming on track and it is growing year by year. Hence, it can be said that

economy is recovering from the recession in proper manner. If recession all over the

globe get softens then there are good prospects of growth in the UK economy. This

indicates that there are ample opportunities of growth in the UK travel and tourism

industry. Hence, Thomas cook must remain prepared to grab these opportunities that may

come in existence in future time period.

TASK 2

2.1 Different type of management accounting information's that are used by the travel and

tourism business

Different type of information of management accounting that can be used in travel and

tourism business is as follows.

Budget- It is a statement that is used by the business firms in order to project to their

expected income and expenditures. In this statement there are two sections and one of

these related to the revenue and other is related to the cost. In the budget these expenses

are deducted from the revenue and cash balance is transferred to the next year opening

balance. Hence, budget is a statement that indicates the expectations of the top

management from the middle and lower level of management. Thomas cook regularly

prepare budget in order to keep its expenses in control (Pitkänen and Lukka, 2011). For

the specific time period these budgets are prepared by the business firms. These budgets

also indicate the targets that a top management wants to achieve foe the specific time

period.

Variance analysis- It is a management accounting information that is used by the

business firms. Under this technique variance is calculated related to the material and

labor. On the basis of variance firm identify that it gives good or worst performance. If

performance is good then there is no problem. But if variance is negative then

management takes a strong corrective action in order to make sure that same variance

will not get repeated again in future.

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

Break even analysis- It is a method that is used by the business managers to determine

level of sales that Thomas cook actual need to make in order to cover its actual cost. If

sales are made below this level then firm will incur loss (Sisaye and Birnberg, 2010).

Hence, it is necessary to make sure that sales made by the Thomas cook surpass the level

of sales that is indicated by the break even analysis of the firm.

2.2 Use of management accounting information as a decision making tool

Following are the uses of the management accounting information as a decision making

tool for the business.

Keeping expenses in control- By making use of the budget all expenses can be kept in

control by the business managers. In order to determine estimated expense amount

manager needs to make prediction. This predicted amount must be actual in nature.

Business decisions are made on the basis of this predicted amount (Christ and Burritt,

2013). If such amount will be wrong then all business decisions made on the basis of

budget will automatically get wrong. Hence, it is necessary for the managers to follow a

cautious approach while preparing a budget.

Helps in taking price reduction decisions- By making use of break even analysis price

related decisions can be made by the managers. This is because break even analysis

indicates the minimum level of sales or units that a firm needs to sale in order to cover

cost of production. If firm wants to reduce price of its product then it need to consider

results of the break even analysis. This is because it is an analysis that is reflecting the

level up to which Thomas cook can reduce price of its product. Hence, it can be said that

this is an important management accounting information that is used by the decision

makers.

Identification of areas of poor performance- By making use of management accounting

information managers can identify areas of poor performance. This is done through the

use of variance analysis (Albelda, 2011). If areas of poor performance will be identified

then managers will formulate a strategy that will help in ensuring that such type of

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

variance must not come in existence again. This will finally helps in improving company

performance. Hence, it can be said that variance analysis as a technique has a great

importance to the firm.

THIS IS A SAMPLE ASSIGNMENT

BUY QUALITY ASSIGNMENT TO SCORE A+ GRADES

CONTACT US

TOLL-FREE NO: +61 879057034

WHATSAPP NO: +61 424715655

EMAIL: [email protected]

WEBSITE: http://www.assignmentprime.com/

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

TASK 3

3.1 Interpretation of travel and tourism accounts

Following are the interpretations of the Thomas cook accounts.

Gross profit ratio- Gross profit ratio indicates the proportion of the sales that is covered

by the gross profit. This ratio also indicates the firm cost control capacity. If gross profit

ratio of the firm is increasing then it means that either firms sales is increased or direct

expenses are in control of the firm (Gross profit ratio. 2016). In case of Thomas cook this

ratio is increased and both elevation in sales and control on direct expenses may be

reason behind same. In FY 2014 this ratio is 21.75% and in next financial year it becomes

24%. Hence, it can be said that Thomas cook give a good performance on this front.

Net profit ratio- The net profit ratio indicates part of sales that is covered by the net

profit. The net profit ratio of the firm in FY 2014 was -1.34% and that in FY 2015

become 0.26%. Means that in last financial year this ratio increased by some percentage.

This indicates that firm is making heavy amount of indirect expenses in its business. This

trend continues in both years. If we compare both ratios then it can be concluded that

firm is making small amount of direct expenses relative to indirect expenses. Hence, on

this ratio Thomas cooks need to do lots of work.

Current ratio- This ratio indicate the liquidity position of the Thomas cook (Current

ratio. 2015). Standard current ratio is 2:1 and it means that for every one pound of current

liability there must be two pound of current assets. In the FY 2014 current ratio is 0.47

and same in the FY 2015 is 0.55. But in both years value of this ratio is below one. This

indicates that firm is not in position to pay its current liabilities on time using current

assets. Thus, this is another point where Thomas cooks needs to work.

Quick ratio- This ratio gives a clear picture of the firm liquidity position. Quick ratio of

the firm is below standard ratio 1:1 which means that for every one pound of current

liability there must be one pound of quick assets. Here also ratio values are below

standard. On comparison of current and quick ratio values it can easily be seen that there

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

is a negligible proportion of prepaid expenses in the current assets of the firms. Hence,

Thomas cooks needs to take some steps in order to increase proportion of current assets

in the balance sheet.

Debt equity ratio- This ratio indicate the capital structure of the firm (Debt equity ratio.

2016). In case of Thomas cook the ratio value is 2.89 which increased to 3.05 in FY

2015. This indicates that in FY 2014 debt was just double of equity. But in FY 2015

situation get worst and debt become three times larger than equity. This will create

problems for the firm in future because profit is very low and finance cost is increasing.

Hence, in upcoming year Thomas cook may face huge problem in paying its finance cost

on time.

TASK 4

4.1 Sources of funds for the projects

Following are the sources of finance for Thomas cook.

Shares- Firm can issue shares and can raise huge amount of capital from general public.

For this it will need to fulfill certain criteria (Bowen, Call and Rajgopal, 2010). There is

large imbalance in the Thomas cook capital structure. This limitation can be removed by

issuing shares in the primary market. Hence, it is an appropriate source of finance for

Thomas cook.

Private equity- Thomas cook can use private equity which is a variant of equity in order

to finance its operations. Due to low profitability there is high probability of under

subscription of issue. In order to prevent this situation firm can resort to private equity in

order to finance its business operations.

Debt- This is a last option that is available to the Thomas cook because there is already

higher weight-age of debt in the firm capital structure (Malmi, 2010). By selecting any of

the above mentioned alternative firm to some extent can control its finance cost.

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

CONCLUSION

On the basis of report it is concluded that management accounting helps firm in

determining price of the products. It also helps managers in taking cost curtail decisions. It is

also concluded that price of the product must not determine only on the basis of cost of

production. Other factors must also be considered while determining price of the product. Firms

must time to time conduct ratio analysis in order to identify their current position and to take

corrective actions on time. By doing this firm can remain on growth track.

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

REFERENCES

Books & journals

Albelda, E., 2011. The role of management accounting practices as facilitators of the

environmental management: Evidence from EMAS organisations. Sustainability

Accounting, Management and Policy Journal. 2(1). pp.76-100.

Bowen, R.M., Call, A.C. and Rajgopal, S., 2010. Whistle-blowing: Target firm characteristics

and economic consequences. The Accounting Review. 85(4). pp.1239-1271.

Burritt, R.L. and Schaltegger, S., 2010. Sustainability accounting and reporting: fad or trend?.

Accounting, Auditing & Accountability Journal. 23(7). pp.829-846.

Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of

contingent variables for adoption. Journal of Cleaner Production. 41. pp.163-173.

Drury, C.M., 2013. Management and cost accounting. Springer.

Haiza Muhammad Zawawi, N. and Hoque, Z., 2010. Research in management accounting

innovations: An overview of its recent development. Qualitative Research in

Accounting & Management. 7(4). pp.505-568.

Lee, K.H., 2011. Motivations, barriers, and incentives for adopting environmental management

(cost) accounting and related guidelines: a study of the Republic of Korea. Corporate

Social Responsibility and Environmental Management. 18(1). pp.39-49.

Malmi, T., 2010. Reflections on paradigms in action in accounting research. Management

Accounting Research. 21(2). pp.121-123.

Nandan, R., 2010. Management accounting needs of SMEs and the role of professional

accountants: A renewed research agenda. Journal of applied management accounting

research. 8(1). p.65.

Pitkänen, H. and Lukka, K., 2011. Three dimensions of formal and informal feedback in

management accounting. Management Accounting Research. 22(2). pp.125-137.

Sisaye, S. and Birnberg, J., 2010. Extent and scope of diffusion and adoption of process

innovations in management accounting systems. International Journal of Accounting &

Information Management. 18(2). pp.118-139.

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

ter Bogt, H. and van Helden, J., 2012. The practical relevance of management accounting

research and the role of qualitative methods therein: the debate continues. Qualitative

Research in Accounting & Management. 9(3). pp.265-273.

van der Steen, M., 2011. The emergence and change of management accounting routines.

Accounting, Auditing & Accountability Journal. 24(4). pp.502-547.

Online

Current

ratio.

2015.

[Online].

Available

through:

<

http://www.myaccountingcourse.com/financial-ratios/current-ratio>.[Accessed on 3rd

February 2016].

Debt equity ratio. 2016. [Online]. Available through: < http://www.accountingtools.com/debt-to-

equity-ratio>. [Accessed on 3rd February 2016].

Gross profit ratio. 2016. [Online]. Available through: < http://www.accountingtools.com/gross-

profit-ratio>. [Accessed on 3rd February 2016].

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


Sample assignment finance and funding

Appendix

Table 1: Ratio analysis

2014

1868

8588

21.75%

2015

1772

7384

24.00%

Gross profit

Net sales

Gross profit ratio

Net profit

Net sales

Net profit ratio

-115

8588

-1.34%

19

7384

0.26%

Current assets

Current liability

Current ratio

1829

3894

0.47

2035

3702

0.55

Quick assets

Current liability

Quick ratio

1795

3894

0.46

2003

3702

0.54

Debt

Equity

715

247

2.89

1038

340

3.05

Debt equity ratio

TOLL-FREE NO: +61 879057034 EMAIL: [email protected]

WHATSAPP NO: +61 424715655 WEBSITE: http://www.assignmentprime.com/

ASSIGNMENT HELP & WRITING SERVICE AUSTRALIA


  • Login