Program |
Diploma in Travel & Tourism |
Unit Number and Title |
Unit 2 Finance and Funding in Travel Tourism – MEP |
QFC Level |
Level 5 |
This Unit 2 Finance and funding in travel and tourism assignment – MEP is focused on Finance and Funding in Travel and Tourism sector which will help in gaining knowledge about different concepts of finance of the organizations. Providing services of travel and tourism includes costs and there are many skills which helps the management in making decisions about the costs, funds or funding of the services. This project will help in the development of understanding about financial systems of the sector. The assignment is covered in four tasks which will include the discussions about various aspects of finance and funding of Travel and tourism sector of UK.
This task is based on the given case study of Merlin Entertainments Plc which is focused on creating unique experiences of the guests and visitors in UK and it has more than 60 million guests annually.
Costs can be referred to the amount which is to be incurred to buy anything or to produce anything. Merlin Entertainments Plc incurs a cost for providing different products and services and to meet the expectations of the customers. Costs are of different types like fixed cost, variable cost, overheads, etc. the company is required to measure its costs in order to determine the prices of its services. For determination of the prices, Cost Volume Profit analysis is the technique which is very useful and appropriate (DINA & BU?AN, 2009).
Cost- Volume and profit analysis is a part of financial accounting in which it is determined that how the variations in the cost or volume of products or services influence its profits assuming that the sales price, fixed costs and variable costs are constant. This technique is used by the finance managers in Merlin Entertainment Plc to know the changes in profits because of the changes in costs and volumes of the company’s products and services. CVP analysis can be presented on a graph where the costs and revenue interacts and that point is known as Break Even point. This technique helps Merlin Entertainments Plc to plan its operations and to take business decisions for future. CVP analysis helps in determining the capacity of the company to produce and deliver services and also determines the spending amounts and investments amounts of the company (Trifan &Anton, 2011).
There are different types of pricing methods which are used in the travel and tourism sector .TRG uses the following pricing methods for deciding the prices of its services:
There are many types of business in Travel and tourism sector and different pricing strategies are adopted by them. For example, Titan Travel is a tour operator in UK and it uses cost based pricing because it adds up a profit percentage it desires on the total expenditure it makes no provision of the services. Another example can be taken of Hotel Premier Inn which provides accommodation. There is much competition in the hotel business as they all provide the similar services. So it provides market based pricing by considering the demand of the consumers and the prices adopted by the competitors. Easy Jet is an airline service provider and it adopts discounted pricing which means cheaper rates in off seasons and costly tickets in peak seasons (Bozhkova & Ryabchenko, 2012).
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Call us: +44 – 7497 786 317Profits are the gains which are earned by the companies by selling its products or services. It is the difference between the earned amount by the company and the amount it incurred in producing that service or product. There are factors which influence the profits of Merlin Entertainments Plc.
This task covers a given case study of TRG, The Restaurant Group and interpretation is been made on its financial figures and accounts for year ending 2014 and 2015. TRG is a group of restaurants which has more than 500 restaurants and pubs in UK and it has plans for doubling its size and share in the market in the next decade. It believes in delivering great taste and excellent services to its guests. It has around 43 million customers and more than 30 brands (TrgPLC, 2016).
The Restaurant Group
Particulars |
2015 |
2014 |
EBIT |
127990 |
116970 |
Revenue |
6,85,381 |
6,35,225 |
Profit for the year |
68,886 |
66,999 |
Total equity |
2,83,560 |
2,44,524 |
Current Assets |
38,005 |
29,410 |
Current liabilities |
1,36,403 |
1,21,634 |
Total Liabilities |
1,84,518 |
1,79,895 |
Quick assets |
31,616 |
23,880 |
Cost of sales |
5,58,491 |
5,21,325 |
Average Inventory |
6,389 |
5,530 |
Total Assets |
4,68,078 |
4,24,419 |
Earnings per share |
34.55 |
33.40 |
Dividend per share |
17.40 |
15.40 |
Calculation of Ratios for interpreting the financial performance of TRG Plc. For 2014 and 2015:
1. Current Ratio
2. Quick Ratio
3. Profit Margin Ratio
4. Return on Equity
5. Stock turnover ratio
6. Asset Turnover Ratio
Ratio Interpretation and Explanation
This project focuses on the cost volume profit analysis of Merlin Entertainments Plc which is given in the case and also different pricing methods are discussed for various travel businesses. There are four tasks which includes various concepts of funding and finance of the travel and tourism sector. Different ratios for The Restaurant Group in UK have been calculated by referring to its financial accounts for 2014 and 2015. These ratios are used to analyze the financial performance of the businesses. A presentation and a poster has been created to explain the sources of funds and to provide management accounting information for the business.
Bozhkova, V.V. & Ryabchenko, I.M. 2012, "Systematization of marketing pricing methods", Marketing ì Menedžment Innovacìj, vol. 3, no. 4, pp. 74-80.
DINA, I. & BU?AN, G. 2009, "USING COST-VOLUME-PROFIT ANALYSIS IN DECISION MAKING", Annals of the University of Petrosani : Economics, , no. 3, pp. 103-106.
El-Dalabeeh, A.K. 2013, "The Role of Financial Analysis Ratio in Evaluating Performance: (Case Study: National Chlorine industry)", Interdisciplinary Journal of Contemporary Research In Business, vol. 5, no. 2, pp. 13.
Maricica, M. & Georgeta, V. 2012, "Business Failure Risk Analysis using Financial Ratios", Procedia - Social and Behavioral Sciences, vol. 62, pp. 728-732.
Pavlatos, O. & Paggios, I. 2008;2009;, "Management accounting practices in the Greek hospitality industry", Managerial Auditing Journal, vol. 24, no. 1, pp. 81-98.
Suhaimi, R., Abdullah, F. & Saban, G. 2010, "Factors affecting profit efficiency of commercial banks in Malaysia", , pp. 1059.
TrgPLC. (2016). Who We Are. Retrieved 11 05, 2016, from http://www.trgplc.com/who-we-are
Trifan, A. & Anton, C. 2011, "USING COST - VOLUME - PROFIT ANALYSIS BY MANAGEMENT", Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, vol. 4, no. 2, pp. 207-212.
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