TRAVEL AND TOURISM FINANCE

Travel and Tourism- Finance and Funding



Assignment

Task 1)

Thomas Cook Ratios

Thomas Cook

Ratios

Formula

2008

2009

CURRENT RATIO

CA/CL

2.196078

2.519231

ACIDIC RATIO

(CA-Inventory)/CL

1.215686

1.480769

ROCE

EBIT/(TA-CL)

0.392857

0.745098

DEBTORS COLLECTION PERIOD

(Trade Debtors × No. of Working Days) / Net Credit Sales

49.64

44.92308

CREDITORS COLLECTION PERIOD

 (Trade Creditors × No. of Working Days) / Purchase

53.09091

61.42395

NET PROFIT %

(Net profit/Sales)*100

20%

43%

GROSS PROFIT %

(Gross profit/Sales)*100

34.8%

51.7%

Lama Tours

Reason to accept the offer:

 

Last month

Current Month

Offered

Per person cost

185

220

145

unit sold

1200

1200

200

total selling cost

222000

26400

29000

Fixed Cost

70000

70000

483

cost

200000

96400

29483

The reason to offer this educational trip is due:

Being part of a group buying, promotion and marketing scheme: Companies can reduce their operating costs and share information if they are part of a group buying and promotional scheme.

Having a clear market position: Businesses that understand their clients' needs and develop ways to meet them ensure good word of mouth recommendations and repeat clients.

Development of new products: The development of products those suit clients' specific needs and companies' market positions ensure continued revenue.

Ensuring pricing policy is appropriate: Ensuring that product and packaging is undertaken properly is essential to maintaining profit (www.expedia.com).

Ability to provide goods/services in diverse locations: Have a wide variety of information and travel packages to suit the specialist or niche needs of travelers attracts customers.

Access to the latest available and most efficient technology and techniques: Having a web-based communication, reservation, business operations and information technology is vital to success in an increasingly technological world.

Access to multi-skilled and flexible workforce: Having on-going staff training in all areas of operation, including excellent product knowledge, is essential to providing quality customer service.

Management of seasonal production: Understanding seasonality in travel demand and patterns and tailoring agency operations around this is necessary to continued revenue growth.

Danger in Long-Run

The danger will remain particularly sensitive to any global, regional or major country economic activity, and other factors (including geopolitical instability and actual or threatened terrorism) that affect the level of holiday, pleasure, sport and business travel. The relative price of domestic and international travel, which is linked to international exchange rate movements, is also important. The price of fuel is expected to increase over the next five years, which will have an adverse effect on the price of travel (www.london-tourist-information.co.uk).

Technology will influence the retail component of the industry as online travel booking systems continue to grow in popularity. Similarly, the industry will continue to face significant competition for its share of household disposable income from other types of leisure and recreation. The industry is expected to be adversely affected by growth in direct bookings with tour and travel operators, which bypass travel agents. Significant price-based competition in the airline travel market will continue to affect this industry, as commission revenue declines.

Major operators will acquire global, regional and local websites to improve their revenue and profit growth, and to capture a larger share of this growing area. The trend toward online bookings and reservations will eventually lead to significant consolidation of the traditional agency operation, with a reduction in locations and staff in Europe, the United Kingdom and the United States. Major agencies with online operations will, however, be able to improve their profit margins significantly, due to ...