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Diploma in Business
Unit Number and Title
Unit 2 Finance and Funding in Travel and Tourism Assignment - GDP
Finance and Funding in Travel and Tourism is based on various aspects of the travel and tourism industry and their impact on the overall effectiveness of the GDP of the company. Globalisation plays effective role in the increasing scope of the tour and travel industry in which there are eliminated the boundaries of countries and it becomes easy to travel within different countries and making impact on the overall effectiveness of the company. There can defined various aspect related to the decision making in the travel and tourism industry which is included in the strategic management of the company making impact on the overall effectiveness of the company. The impact of the relationship between the cost, sales, and profit of the company and the management between them define the level of effectiveness of the organisational structure. There is analysed various aspects of UK based company involved in the entertainment and travel and tourism industry Merlin Entertainments Plc.
Financial management is essential and important from the point of view of analysing various aspects related to the analysis of the organisational performance and effective decision making in the organisation related to the expansion of the company. Strategic decision making is a part of the strategic management in the organisation and make impact on the effectiveness of the company(Huggett, et. Al 2010). Financial management can be defined as effective management, application and selection of sources for the collection of funds in organisation. In travel and tourism industry there are involved different types and cost diversified in different factors and make impact on the effectiveness of the organisational effectiveness. Cost in travel and tourism industry is defined as the cost of accommodation, transportation, food and beverages, human resource compensation and other costs.
Merlin Entertainments Plcis a British company providing services in travel and tourism industry operating in 124 attractions, 16 hotels and 3 holiday villages in more than 25 countries around the globe and making a net profit of $170 millionin the year 2015 with the 25000 employees working for the company. The main segments in which the company is providing its services are Midway Attractions, Legoland parks and Resort Theme Parks. The company is making its revenue from these three segments. The company Merlin Entertainment Plc is focused on achieving the break-even-point on which the company can achieve the no profit and no loss situation and income on this point treated as the actual profits of the company. This can be achieved by increasing the volume of sales of the company and decreasing the cost of the company. The cost volume profit analysis and the break even analysis make impact on the strategic decision making in the Travel and Tourism Company and help in achieving effective results in the company(Huggett, et. Al 2010).
There are included various costs in the total cost of the company like fixed and variable cost, direct and indirect cost which are defined as important for the calculation of the overall organisational effectiveness and achieving profits making situation in the organisation. There are various methods and techniques which are used to provide effective financial condition and help in effective and strategic decision making in the organisation which leads to effective results in travel and tourism industry. Merlin Entertainments Plc is using various methods and techniques for costing like marginal costing, absorption costing and activity based costing for effective results of financial management in organisation and to achieve the breakeven point for the travel and tourism company(Laursen, 2013).
In every travel and tourism industry products of the company are defined as the different packages which are offer by the company to its customers and make impact on the overall effectiveness of the company in which there are considered various aspects while determining price of products and also there are used different methods and techniques for determination of prices in the travel and tourism industry. The following are the pricing methods which can be adopted in organisations like Merlin Entertainment Plc.
Cost oriented methods:
These are the methods of pricing in which cost is defined as a base of the determination of product prices in which there are adopted various cost oriented methods some of them are as follows.
Market oriented methods:
In this pricing method there are considered market conditions and their impact on the organisation and the customers are considered for the determination of prices of product.
In travel and tourism industry the business environment is dynamic which make impact on the overall effectiveness of the business. Merlin Entertainments Plc is working in this industry on huge level and providing effective services to its customers who are spread in different countries around the globe. Following are the factors making impact on the profits in travel and tourism industry.
The Restaurant Group Plc is leading food chain Company which is spread in all over the world and having effective level of productivity and profitability. Company takes all its important decisions by effective analysis and strategicdecision making in the various aspects of the company(cost-volume-profit analysis 2010). Financial analysis includes analysing different ratios and statements of the company which can influence the decision making for essential organisational decisions. Following are the various ratios of the company for the year ending 27 December 2015.
Profitability Ratios: These ratios are defined to analyse various aspects related to the profitability position of the company and various aspects by which the capability of the company to make profits can be identified.
Profit Margin Ratio
Return on Equity
Total shareholders’ equity
Gross profit ratio
Gross profit ratio
Operating Profit ratio
Net profit as a percentage of sales
These ratios are defining that the company is growing as in the profitability ratios of the company are increasing in the year 2015 in comparison with the year 2014. This is showing effectiveness of the company to make profits and efficient management in the company and its impact on the overall effectiveness of the company(cost-volume-profit analysis 2010).
Liquidity Ratios: Liquidity ratio defines the level of solvency of the company and also defines various aspects which define the level of flexibility in the company. Following are some ratios defining level of solvency of the company.
Current Ratio (%)
Acid Test Ratio
Total capital employed
profit before interest and tax
long term liabilities
Equity shareholders capital employed
profit before interest and tax
Ordinary share capital
The ratios are calculated by using spread sheet method. The ratios are showing the level of solvency in the company which is making impact on the flexibility of the company and it is showing that the company is having insufficient level of assets for covering the liabilities of the company(financial analysis 2016).
Efficiency Ratio: This ratio shows the level of efficiency of the company and its impact on the overall effectiveness of the profitability. Following are some efficiency ratios.
Inventory Turnover Ratio
Cost of goods sold
Asset Turnover Ratio
Average stock turnover of the company
Dividend Payout per share
The efficiency ratios of the company are showing the actual position of the company and its operations management as in there is lack of sufficient capital in the company to meet its liabilities. The ratios are decreasing in the year 2015(Merlin Entertainment,2015).
Finance and Funding in Travel and Tourism is detailed study of various aspects related to travel and tourism industry in which different financial management and analysis is done for the effective decision making in the organisation(Half Year 2016). There are also defined relationship between the cost, profit and volume in the company to achieve effective results in the company. There are various aspects which can make impact on the different aspects related to the effectiveness of decision making in the organisation.
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Half Year 2016 Merlin Entertainments PLC Earnings Call - Final 2016, , CQ-Roll Can, Inc.
Huggett. C. & Pownall, D. 2010, Teaching Travel And Tourism 14, 1st edn, Open University Press, GB.
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Li, Q., Xu, Q. & Li, H. 2013, Advanced Materials Research: Sustainable Development of Industry and Economy (1), Trans Tech Publishers.
Medlik, S. 2012;2003;, Dictionary of Travel, Tourism and Hospitality Provision 3rd;3; edn, Taylor and Francis, Jordan Hill.
Merlin Entertainments PLC Trading Statement Presentation - Final 2015, , CQ-Roll Call, Inc
1erIin Entertainments PLC Trading &aremenx Presentation - Final 2015, , CQ-Roll Call, Inc.