Program |
Diploma in Business |
Unit Number and Title |
Finance Funding in Travel Tourism Assignment ME |
QFC Level |
Level 5 |
Travel and tourism industry one of the most fast growing industry that contribute major funds in their respective economy. But then also in order to run the activities of the travel and tourism finance is adequate requirement. There are huge capital investments are required in order to run the travel and tourism industry. As there are lots of development, improvements and safety arrangements are made and all these demand huge capital investment. Organisation perform their activities within this industry also need to follow different pricing methods as well as need to take care of their costs incurred in order to earn adequate profits. In order to discuss such different aspects two organisations such as Merlin Entertainment Plc and The Restaurant Group Plc is utilised taken into consideration as they help in getting better understanding.
Merlin Entertainment Plc having three different segments including Midway Attractions is their smaller segment in which they provide indoor attractions within resorts or city centres, The Resort Theme Parks include services related to rides, shows and accommodation and The LEGOLAND Parks which include services related to their ride, shows and accommodations on theme basis. They render adequate services in order to get the profits and the charge adequate prices for their purpose. All these aspects get discussed in the below report.
Merlin Entertainment Plc run their business activities in three different segments and all of these segments incurred adequate set of costs that helps in getting adequate funds out of which they generate adequate profits. For them costs and volume within their financial management plays a important role for the purpose of evaluating their overall profitability. Merlin Entertainments Plc follows the different aspects such as Break-even point and cost-volume profit analysis in order to make evaluation of their profitability (Medlik, 2012). As per the cost-volume profit analysis they evaluate the measures that how fluctuating costs and volume put effect over their profit earning capacity. With this they make use of the break-even point analysis in which they set a point where they realise that their incurred cost is recovered and after that point the revenues are their complete profits. There are various costs that get recognised in two different aspects such as variable cost and fixed cost.
There are various different pricing methods are utilised by the travel and tourism sector and some of these get discussed below such as: -
There are various factors that influence profit for Merlin Entertainments Plc businesses and some of these get discussed below such as: -
It is analysed that Merlin Entertainment Plc incur lots of costs in order to run their business strategy and some of them are variable in nature and some of them are fixed nature. They make adequate use of these costs in their pricing decisions so that they set adequate prices for their products in order to benefit their customers as well as their profit earning capacity. The earning capacity of Merlin Entertainment Plc is influenced with the different factors that include weather/climate, season, terrorism activities and many more.
Ratio analysis is made for the purpose of interpreting financial accounts of The Restaurant Group (TRG) PLC. In order to interpretation ratios are calculated for two years such as 2015 & 2014 in order to get their current status. Below is the calculation made in order to get ratios such as: -
S. No. |
Ratios |
Calculation |
2014 |
Calculation |
2015 |
1 |
Profit Margin ratio |
|
|
|
|
|
(Net profit/sales revenue) * 100 |
(66,999/635,225) * 100 |
10.55% |
(68,886/685,381) * 100 |
10.05% |
|
|
|
|
|
|
2 |
Return on equity |
|
|
|
|
|
(Net income/ Total shareholders' equity) * 100 |
(66,999/244,524) * 100 |
27.40% |
(68,886/283,560) * 100 |
24.29% |
|
|
|
|
|
|
3 |
Current ratio |
|
|
|
|
|
Current assets/current liabilities |
(29,410/121,634) |
0.24 |
(38,005/136,403) |
0.28 |
|
|
|
|
|
|
4 |
Quick ratio |
|
|
|
|
|
Quick asset/ Current liabilities |
(23,880/121,634) |
0.20 |
(31,616/136,403) |
0.23 |
|
|
|
|
|
|
5 |
Inventory turnover ratio |
|
|
|
|
|
Cost of goods sold/average inventory |
(521,325/5,530) |
94.27 |
(558,491/6,389) |
87.41 |
|
|
|
|
|
|
6 |
Asset turnover ratio |
|
|
|
|
|
Sales revenues/Total assets |
(66,999/424,419) |
0.16 |
(68,886/468,078) |
0.15 |
|
|
|
|
|
|
7 |
Earnings per share |
|
33.39 |
(given) |
34.55 |
|
|
|
|
|
|
8 |
Dividend per share |
|
15.4 |
(given) |
17.4 |
Interpretation over the calculated ratios as follows: -
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Call us: +44 – 7497 786 317In the end it is interpreted that Merlin Entertainment Plc make use of adequate pricing method such as cost plus pricing method in order to set their prices and put adequate control over their costs so that they earn adequate level of profits. There are some set of factors that influence their profit earning capacity and out of these some are favourable as well as some are adverse. Management accounting information become an effective decision making tool as it rendered combined set of information from different department and it maintains complete record of the information. Ratios are calculated and analysed in order to interpret the financial accounts of TRG Plc and for this purpose 2 years data is utilised. There are various capital projects in the travel and tourism industry for the enhancement of tourism sector. Along with this there are various adequate sources are available from where funds get arranged for meeting the objectives of capital projects.
Ahrendsen, B.L. & Katchova, A.L. 2012, "Financial ratio analysis using ARMS data", Agricultural Finance Review, vol. 72, no. 2, pp. 262-272.
Clarke, R.C. & Merlin, M.D. 2013, Cannabis: Evolution and Ethnobotany, 1st edn, University Of California Press, US.
Evans, N., Stonehouse, G. & Campbell, D. 2012;2003;2002;, Strategic Management for Travel and Tourism , Taylor and Francis, Jordan Hill.
Kim, M.J., Lee, C., Chung, N. & Kim, W.G. 2014, "Factors Affecting Online Tourism Group Buying and the Moderating Role of Loyalty", Journal of Travel Research, vol. 53, no. 3, pp. 380-394.
Maricica, M. & Georgeta, V. 2012, "Business Failure Risk Analysis using Financial Ratios", Procedia - Social and Behavioral Sciences, vol. 62, pp. 728-732.
Medlik, S. 2012;2003;, Dictionary of Travel, Tourism and Hospitality, 3rd;3; edn, Taylor and Francis, Jordan Hill.
Petrevska, B. & Serafimova, M. 2016, "ASSESSING ACCESS TO FINANCE FOR TOURISM DEVELOPMENT: ENTREPRENEURIAL APPROACH", International Journal of Information, Business and Management, vol. 8, no. 1, pp. 35.
Waller, M. 2016, Wanted: a potion to bring back the magic; MERLIN ENTERTAINMENTS, NI Syndication Limited, London (UK).
Wang, D. & Ap, J. 2013, "Factors affecting tourism policy implementation: A conceptual framework and a case study in China", Tourism Management, vol. 36, pp. 221-233.
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